Investors typically use apartment building financing to purchase properties with more than five units that can generate cash flow, build equity, increase leverage, or earn capital gains. Apartment loans can be short-term or permanent loans that fund the purchase and/or renovation of an apartment building. There are three types of Apartment loans: Government-Backed Apartment loans, Bank Balance Sheet Apartment Loans and Short-Term Apartment Loans. Government-backed loans are offered by Fannie Mae, and the FHA. They are best for prime borrower investors who want to purchase an apartment with a low down payment and affordable rate. Bank Balance Sheet Apartment Loans are best for an “absentee owner” who wouldn’t qualify for a government loan. These loans don’t require the investor to live in the same community that the apartment building is located. They are offered by traditional banks across the country. Many of the bank balance sheet loans have rates that adjust after five to ten years These adjustable rates, like the government-backed loans, typically have an adjustable rate index equal to six-month LIBOR rate. After the fixed-rate period ends, interest rates can adjust every six months. Short-term Apartment building financing options are a less common type of apartment building loans. Due to investors typically purchasing apartment buildings as long-term investments. Short-term financing is for investors who want to quickly purchase an apartment building and complete with cash buyers by closing in as quick as possible. These loans are also right for investors who need to season the property before refinancing into a permanent loan.