News Brief

Fannie Mae Offers Lower Interest Rates to Green Multifamily

Multifamily building developers and owners now have a greater financial incentive to pursue green certifications: they’ll be rewarded by Fannie Mae.

Fannie Mae, the leading provider of multifamily financing, has announced that it will offer owners of certified green buildings a significantly lower interest rate on their loans. The lower rate applies to a multifamily building’s refinance, acquisition, or supplemental mortgage, so it encourages existing buildings as well as new construction to become certified under any of the program’s recognized certifications. These include LEED, Energy Star, Enterprise Green Communities Criteria, and Green Globes.

The lower interest rate consists of a reduction of 10 basis points, which would cut a market interest rate of 4% to 3.9%. On a $10 million loan amortized over 30 years, for example, an owner would save $95,000 in interest payments in the first ten years, according to a U.S. Green Building Council press release.

Fannie Mae is relying on evidence that lower energy, water, and maintenance bills in certified buildings leave more disposable income for loan recipients. Jeffery Hayward, executive vice president for Fannie Mae multifamily, said, “We clearly see the value in the triple bottom line of certified green buildings: financial benefits of lower operating costs for owners and tenants, social benefits of better-quality housing for renters, and environmental benefits for everyone.”

These reduced-rate loans will also be securitized as Green Bonds, flagging them as socially responsible investments. 

For more information, see Fannie Mae's Multifamily Green Financing website

Published February 20, 2015

Pearson, C. (2015, February 20). Fannie Mae Offers Lower Interest Rates to Green Multifamily. Retrieved from

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February 23, 2015 - 11:47 am

This is a great step and overdue. If Fannie quantifies relative risk performance of green to non-green loans we can expect Fannie to increase the premium discount for green multifamily units.

Fannie should also extend this discount to green single family homes