What Insurance Do Fannie Mae, Freddie Mac, HUD and CMBS Loans Require?

Which Rules Apply to Your Loan?

Your loan documents control. The published program rules show what those documents usually say and how a servicer reads them. For the basics every lender asks for, start with our general guide to lender insurance requirements.

Four kinds of loans show up most on larger and multi-location Texas properties, and each keeps its rules in a different place.

The agencies' multifamily programs finance residential rental property. Office, retail, industrial and hotel owners usually meet these rules through CMBS or other lenders, while apartment owners may face any of the four.

How Much Property Coverage Do Agency and CMBS Loans Require?

Agency and CMBS loans usually require property coverage for the full cost to rebuild, on a replacement cost basis, with no coinsurance penalty. The details differ by program, and the differences matter when a building's value is close to the limit.

• Fannie Mae (Section 501.02A). Special-form coverage of at least 100% of insurable value for a single-building property, or 90% for several buildings. The policy must have no coinsurance clause, or one offset by an agreed amount of at least 100% of insurable value. Roofs may be on an actual cash value basis. Insurable value excludes land.
• Freddie Mac (Section 31.5). The same 100% and 90% tests, written on replacement cost. Roof coverings may be on an actual cash value basis. An agreed amount, if used, must be at least the estimated insurable value.
• HUD (MAP Guide 3.9.2.4). The minimum face amount is the lower of 80% of insurable value or the insured mortgage balance (a lender minimum, not a measure of rebuilding cost), and it must meet any coinsurance requirement. Insurable value is estimated building by building.
• CMBS. Set loan by loan in the loan agreement. Conduit prospectuses filed with the SEC disclose each deal's insurance representations, but your own loan agreement controls the amount and valuation basis.

Fannie Mae's guide adds that a margin clause should not be used to determine compliant limits. In other words, the reviewer looks at the limit actually available for your property. Both agencies also recommend an inflation guard endorsement.

When Is Ordinance or Law Coverage Required?

Both agencies require ordinance or law coverage when the property is legally non-conforming under current building, zoning or land use rules. Coverage A (loss to the undamaged part) is the insurable value minus the local damage threshold, or 50% when no threshold is stated. Coverages B (demolition) and C (increased cost of construction) must each be at least 10% of insurable value. Buildings of five or more stories also need Coverage D, the increased period of restoration. See our ordinance or law guide.

What Deductibles Will Each Program Accept?

Each program sets its own caps, and they are not interchangeable. The table shows the main published limits. A percentage deductible is measured against the property's value, so work out the dollar figure for each property.

CMBS loans are less uniform. Deductible limits are set in each loan agreement, so your loan agreement sets the real limit.

Both agencies accept an annual aggregate deductible if the full aggregate is funded and held in a segregated account, a tax and insurance escrow, or by a third party. Our deductibles guide explains how each type works.

What Do Lenders Require for Named Storms on the Texas Coast?

Lenders on the Texas coast usually require named-storm coverage at or near the property's full value, even if it comes from a separate policy. This is where coastal Texas programs most often need a closer look.

• Fannie Mae (Section 502.02). If the property policy excludes wind-related catastrophes and the property is in a Tier I named storm county as defined by the insurer, a separate named storm policy must cover at least 90% of TIV. On a blanket policy, the limit must cover 90% of the largest single property's TIV. The limit cannot rest only on a probable maximum loss model. A state insurance plan may be considered when named storm coverage is unavailable.
• Freddie Mac (Section 31.7). A blanket named storm limit must be at least 90% of the largest individual TIV, per occurrence, and must reinstate after a loss. If wind comes only from a state windpool, the policy must equal 100% of TIV, with an agreed amount or a coinsurance clause of 80% or less.
• Storm surge. If the named storm policy excludes storm-surge flooding, both agencies require flood insurance at the NFIP maximum for buildings in the 500-year flood zone (shaded Zone X).
• Business income. The waiting period for named storm income coverage can't exceed 15 days, or $100,000 when stated in dollars.
• CMBS. Windstorm and named storm requirements, including amounts and deductibles, are set loan by loan in the loan agreement.

In the TWIA area, the state plan has a ceiling. TWIA's Q2 2026 fact book lists $4,424,000 as the most it insures for a commercial structure and its contents combined. A larger coastal building may need more wind coverage above TWIA, or a private wind policy instead, to meet a 90% or 100% test. Our TWIA guide explains the layers, and our named-storm strategy guide covers excess wind, deductibles and flood together.

How Much Flood Insurance Do Agency and CMBS Lenders Want?

More than the federal minimum, which our general lender guide explains. For buildings in flood zones beginning with A or V, agency and CMBS loans build on that floor.

• NFIP limits. The NFIP tops out at $500,000 per building for non-residential and 5+ unit residential buildings. Contents go to $500,000 for non-residential and $100,000 for apartments. Larger buildings usually need excess flood or private flood to reach the agency amounts.
• Private flood. Both agencies require private flood written on replacement cost, at least as broad as the NFIP policy. Freddie Mac also bars a coinsurance penalty.
• Deductibles. For a private flood policy, the agencies cap the deductible at $50,000 per building (10 or fewer buildings in the zone) or $500,000 per occurrence (more than 10). The NFIP's maximum deductible is acceptable. Fannie Mae's guide says the excess flood deductible can equal the NFIP limit beneath it.
• Remapping. Freddie Mac requires coverage within 120 days after a FEMA map change puts a building in a high-risk zone.

The NFIP runs on short-term extensions from Congress. As of the Congressional Research Service's September 2026 update, it was authorized through December 11, 2026. If authority lapses, new NFIP policies can't be written until Congress acts. Order flood early when a closing date is near. See our commercial flood guide.

How Many Months of Business Income or Rent Loss Is Required?

Twelve months is the baseline, and larger loans add more time. The coverage is loss of rents for apartments and most leased buildings, or business income for hotels.

• Fannie Mae (501.02D) and Freddie Mac (31.6). Actual loss sustained for 12 months, or 12 months of effective gross income, or net operating income plus continuing expenses. The waiting period can't exceed 72 hours. Loans of $35 million or more need a 90-day extended period of indemnity option.
• All required perils. Fannie Mae requires income coverage for every required coverage, including ordinance or law Coverage D, windstorm, flood, earthquake and terrorism.
• CMBS. The period, and any extended period of indemnity, is set by each loan agreement, so check yours.
• HUD. We did not find a set period in the MAP Guide's insurance section. Look to your HUD loan documents and the servicer.

The lender's minimum is a floor, not a measure of your real restoration time. Our business income guide shows how to test it with a business income worksheet.

What Liability and Umbrella Limits Do Agency Loans Require?

Agency loans require general liability of at least $1 million per occurrence and $2 million in the aggregate, plus an umbrella that grows with the number of units. Fannie Mae and Freddie Mac publish the same table. Our umbrella and excess guide explains how the layers stack.

• Per-location aggregate. When one policy covers several locations, the general aggregate must apply per location. See per location aggregate.
• Exclusions. The agencies do not accept liability policies that exclude assault and battery, abuse or molestation, animal attacks or firearms. An assault and battery exclusion on an apartment policy fails this test as written.
• Deductible or retention. The combined deductible and self-insured retention is capped at $50,000 for a single property and $250,000 for a blanket program.
• Form and naming. General liability must be on an occurrence form, with the agency named as additional insured. Freddie Mac doesn't require separate proof on a follow-form umbrella.
• HUD and CMBS. HUD's MAP Guide requires $1 million per occurrence and $2 million aggregate, plus auto liability if the owner operates vehicles. CMBS liability and umbrella limits are set by each loan agreement.

Do You Have to Carry Terrorism Coverage?

For Fannie Mae and Freddie Mac loans, yes, under their published guides. For CMBS loans, it depends on the loan agreement. Terrorism coverage for U.S. property is backed by the federal Terrorism Risk Insurance Program, which runs through December 31, 2027. Under 31 CFR 50.20, insurers must make terrorism coverage available on their property and casualty policies, on terms that don't differ materially from other losses.

• Fannie Mae (502.05). Terrorism coverage is required for property and liability, at 100% of insurable value for one building or 90% for several.
• Freddie Mac (31.13). Required for all loans, including refinances. If the property policy excludes it, a separate policy or endorsement is needed. Liability must include terrorism too.
• CMBS. Terrorism requirements, including any cap on what a borrower must spend if the federal program lapses, are set in each loan agreement.
• Blanket limits. Freddie Mac accepts per-policy aggregate limits for terrorism, flood and earthquake on a blanket program.

Which Insurer Ratings, Mortgagee Clauses and Notices Are Required?

Each program sets a minimum insurer rating, exact naming wording and, usually, advance notice of cancellation.

Copy the mortgagee clause exactly. If an insurer won't give advance cancellation notice, Fannie Mae's servicer documents the attempt and keeps a copy of the state law.

Is an ACORD 28 Enough Proof of Insurance?

Usually only at closing. Agency guides treat the ACORD 28 as temporary evidence, and they want the policy itself, or an approved evidence form, after that.

• Fannie Mae (501.01H). Temporary evidence: an ACORD 28 with an ACORD 25, an ACORD 75 binder, or a joint letter from the borrower and agent. Permanent evidence: a copy of the policy. For loans of $10 million or less, the MBA Evidence of Insurance form also works. Above $10 million, or for layered blanket programs, the lender needs duplicate primary policies and a letter from the insurers confirming the other layers follow the same terms.
• Not accepted as permanent proof by Fannie Mae. Declarations pages (except NFIP), single endorsements, binders and certificates of insurance.
• Freddie Mac (31.20 and 31.21). Accepts the ACORD 28, MBA form, binder or declarations as temporary evidence. Permanent evidence is the full policy or the MBA form. Evidence must show limits, sublimits, deductibles, notice terms, whether terrorism is included and flood limits for each high-risk building.
• HUD. The MAP Guide calls for a certified duplicate copy of the permanent insurance policies.

Evidence summarizes the policy and doesn't change it. Plan for policy copies after each renewal, for every layer.

How Do Blanket Programs Get Reviewed and Allocated?

The agencies accept blanket limits, but the servicer must analyze them. Expect requests for your statement of values, catastrophe modeling and a premium allocation for each property. Our statement of values guide lists the columns reviewers expect.

• Fannie Mae (501.01C). The blanket must be as good as a single-property policy, list the property, and act as one per-occurrence shared limit. It must reinstate after a loss (except flood, earthquake and terrorism) and cover the largest total insurable value in the program.
• Freddie Mac (31.3). The servicer reviews the statement of values and the geographic concentration of values. The adequacy test can't rely only on probable maximum loss results.
• Premium allocation. Unless reserves are deferred, Freddie Mac servicers escrow from the agent's premium allocation for each property, or enough to buy a separate policy. Keep allocations current when properties come and go.
• CMBS. Whether a blanket policy is accepted, and on what terms, is set by each loan agreement and reviewed by the servicer.

Our portfolio insurance guide covers margin clauses and program structure.

How Do You Request a Waiver, and What Does the Servicer Need?

Through your lender or servicer, in writing, before the deadline. For a new agency loan, that means before rate lock. Each program has its own path.

• Fannie Mae (501.01I). The lender submits the exception in DUS Gateway at least 72 hours before rate lock, with all supporting documents. Expanded deductibles require borrower liquid assets of at least four times the deductible, a Pass-rated loan with no delinquency in 12 months, and a property condition rating of 2 or better.
• Freddie Mac (31.19 and 31.5(b)). The lender records non-compliance on Form 1133 and submits a waiver request before rate lock. At renewal, the servicer submits a renewal waiver. Expanded deductibles on existing loans need similar liquidity and loan-performance tests and last one policy term.
• HUD (Notice H 2024-6). The Regional Director may waive the wind or named-storm cap above 5%, up to $1,000,000. Larger requests go to HUD headquarters. The MAP Guide also allows a waiver of the 80% coverage test for large multi-building or portfolio properties.
• CMBS. The servicer, and sometimes the special servicer, decides under the loan agreement and the servicing agreement for that deal.

A waiver request often includes items like these, though your servicer decides what it needs:

1. The exact requirement you can't meet, and what you can provide instead.
2. Marketing evidence from your agent: insurers approached, declinations and terms offered.
3. The cost of full compliance compared with the requested option.
4. Your statement of values, any catastrophe modeling and recent loss runs.
5. Borrower liquidity, especially when the request is a higher deductible.
6. A plan to return to compliance at the next renewal, if one is realistic.

If you'd like us to review your program alongside your loan's insurance requirements before closing or renewal (your lender or servicer makes the final call on compliance), contact us or request a review. See how we work with commercial real estate portfolios and apartment owners.

Questions Owners Ask

Sources

1. Fannie Mae Multifamily Selling and Servicing Guide, Part II, Chapter 5: Property and Liability Insurance (Sections 501 to 503) — Online Guide, read October 26, 2026: 501.01A, C, E, H, I; 501.02A to E; 502.02, 502.03, 502.05; 503.01, 503.02
2. Freddie Mac Multifamily Seller/Servicer Guide, Chapter 31: Insurance Requirements — Guide Bulletin update 10/20/26: Sections 31.2 to 31.8, 31.12, 31.13, 31.16, 31.19 to 31.21
3. HUD Multifamily Accelerated Processing (MAP) Guide, 4430.G, Section 3.9 — 2020 MAP Guide, March 2021 revision, the current version listed on HUDCLIPS in October 2026
4. HUD Housing Notice H 2024-6: Wind or Named Storm Insurance Coverage, Maximum Insurance Deductibles — Issued April 17, 2024; amends MAP Guide 3.9.2.4.A.3; companion to Mortgagee Letter 2024-05
5. SEC EDGAR: Benchmark 2026-V23 Mortgage Trust prospectus (Form 424B2) — Filed August 18, 2026; Annex D-1 representations 16 (insurance) and 29 (terrorism); Insurance Considerations. An example of conduit CMBS terms, not a universal standard
6. 31 CFR 50.20: Terrorism Risk Insurance Program, make available requirement (Cornell LII)
7. U.S. Treasury: Terrorism Risk Insurance Program — Program reauthorized through December 31, 2027
8. FEMA: NFIP summary of coverage for commercial property
9. FEMA NFIP bulletin W-13070: June 1, 2014 program changes — Other Residential (5+ units): $500,000 building, $100,000 contents
10. Congressional Research Service IN10835: What Happens If the NFIP Lapses? — Updated September 11, 2026; NFIP authorized through December 11, 2026 (P.L. 119-103)
11. TWIA Q2 2026 Fact Book — Commercial structure and contents maximum: $4,424,000