Agency Debt
vs
Life Company Debt
Agency debt (Fannie Mae, Freddie Mac) finances multifamily at scale with standardized non-recourse terms and competitive rates; life insurance company debt finances commercial and multifamily with more flexibility, lower leverage, and relationship-driven pricing.
TL;DR
Agency wins on multifamily leverage and rate. Life company wins on commercial CRE flexibility, relationship underwriting, and long-term fixed-rate certainty. Both are non-recourse and long-term. Many sophisticated CRE sponsors use both.
What is Agency Debt?
Agency debt refers to commercial mortgages originated under Fannie Mae's DUS program or Freddie Mac's Optigo program. These are government-sponsored enterprise (GSE) programs exclusively for multifamily. Loans are non-recourse, fixed or floating, with 5-30 year terms and 30-year amortization. Typical max LTV: 75-80%; higher on affordable and green programs.
What is Life Company Debt?
Life insurance companies (MetLife, New York Life, Northwestern Mutual, TIAA, etc.) originate commercial mortgages directly on their balance sheets. Life company loans are available for all CRE property types (multifamily, industrial, retail, office, medical). They're typically non-recourse, fixed-rate, with 5-25 year terms. Max LTV usually 60-70% — lower than agency.
Side by side
Agency Debt vs Life Company Debt — the differences.
| Dimension | Agency Debt | Life Company Debt |
|---|---|---|
| Property types | Multifamily only (with limited seniors housing and MHP) | All commercial real estate |
| Typical term | 5, 7, 10, 12, 15, or 30 years | 5, 7, 10, 15, 20, 25 years |
| Typical max LTV | 75-80% (traditional); higher on affordable/green | 60-70% — more conservative |
| Rate structure | Fixed or floating | Primarily fixed |
| DSCR minimums | 1.25x multifamily stabilized | 1.30-1.50x typically |
| Recourse | Non-recourse (bad-boy carve-outs) | Non-recourse (bad-boy carve-outs) |
| Prepayment | Yield maintenance or defeasance | Yield maintenance, open prepay near maturity |
| Assumption | Yes with approval and fee | Yes with approval and fee; relationship-dependent |
| Pricing basis | Treasury + spread, tight and competitive | Treasury + spread, relationship-based |
| Origination speed | 45-60 days typical | 45-75 days, varies by lender |
When to use Agency Debt
- You're financing stabilized multifamily
- You want maximum long-term leverage on the property
- You need a specific agency-only program (affordable, green, manufactured housing)
- You're financing a 1031 replacement multifamily and want non-recourse
When to use Life Company Debt
- You're financing commercial property (office, retail, industrial, medical) — agency doesn't apply
- You want lower leverage on your balance sheet
- You value relationship-based underwriting
- You're financing a larger deal where life company relationships open doors
- You want the most conservative, lowest-rate fixed debt available
Verdict
Agency is the default for stabilized multifamily. Life company is the default for high-quality stabilized commercial CRE at moderate leverage. They're complementary — not competing — for most sophisticated sponsors, who use both depending on the property.
Frequently asked questions
Can I get a life company loan on multifamily?
Yes, though agency debt usually offers better terms and pricing on stabilized multifamily. Life companies may be competitive for larger multifamily deals or when a sponsor values the relationship lender.
Are life company loans always recourse?
No. Most life company CRE loans are non-recourse with standard bad-boy carve-outs, similar to agency and CMBS. Smaller-balance life company loans may be recourse; verify case by case.
Why is life company LTV lower than agency?
Life companies underwrite more conservatively on leverage and apply more stringent DSCR and debt yield requirements. The trade-off is typically lower pricing and more structural flexibility. Agency aggressive leverage comes with more rigid covenants.