Freddie Mac Floating Rate Multifamily Loans

Are you an investor looking for a highly flexible floating rate loan with some of the best interest rates in the market? If so, the Freddie Mac Floating Rate program may be for you. This program finances multifamily loans of $5 million and up, allows up to 80% LTV, has terms of up to 10 years and provides amortization up to 30 years. Freddie Mac Floating-Rate Multifamily Loans boast some of the lowest interest rates in the market, and can often be used effectively as a bridge loan due to its prepayment penalty flexibility. Floating-Rate loans are available for many different kinds of property types such as standard multifamily housing, manufactured housing communities, seniors housing, and Targeted Affordable Housing properties. Other benefits of this program are that these loans are typically non-recourse and allow for both the purchase and refinancing of multifamily properties.

Freddie Mac Floating Rate Multifamily Loans Highlights

Loan size: $5-$100 million (will consider smaller and larger loans on a case by case basis)

Use: Acquisition or Refinance

Terms: 5, 7 and 10 year terms are available

Amortization: Up to 30 years

Interest Only: Partial term and full term IO is available

Maximum LTV:

5 Year Loan

• Amortizing: 75% LTV
• Partial Term Interest-Only: 75% LTV
• Full Term Interest-Only: 65% LTV

7 Year Loan

• Amortizing: 80% LTV
• Partial Term Interest-Only: 80% LTV
• Full Term Interest-Only: 70% LTV

10 Year Loan

• Amortizing: 80% LTV
• Partial Term Interest-Only: 80% LTV
• Full Term Interest-Only: 70% LTV

Minimum DSCR:

5 Year Loan

• Amortizing: 1.30% DSCR
• Partial Term Interest-Only: 1.30% DSCR
• Full Term Interest-Only: 1.40% DSCR

7 Year Loan

• Amortizing: 1.25% DSCR
• Partial Term Interest-Only: 1.25% DSCR
• Full Term Interest-Only: 1.35% DSCR

10 Year Loan

• Amortizing: 1.25% DSCR
• Partial Term Interest-Only: 1.25% DSCR
• Full Term Interest-Only: 1.35% DSCR

Recourse: Loans are non-recourse except for industry standard “bad boy” carve outs

Prepayment Penalty Options: 

• 1-year lockout period followed by 1% prepayment penalty for seven years
• 3% penalty in 1st year, 2% penalty in 2nd year, followed by 1% prepayment penalty for six years
• 5%, 4%, 3%, 2% step-down for the first 4 years, followed by 4 years of 1% prepayment penalty
• 7%, 6%, 5%, 4%, 3%, 2%, 1%, 1% step-down prepayment penalties

Loan Assumability: Loans are assumable with lender’s permission. A fee of 1% assumption fee will be payable to Freddie Mac.

Tax and Insurance Escrow: Typically Required

Replacement Reserves: Typically Required

Eligible Borrowers:

• Borrowing entity can be any of the following: limited partnership, corporation, limited liability company, or a tenancy in common (TIC) with 10 or fewer tenants in common
• Other structures such as general partnerships, limited liability partnerships, REITs and certain trusts may also be acceptable in limited circumstances.
• Borrower must usually be a Single Purpose Entity. However, on loans less than $5 million, a borrower other than a TIC may be a Single Asset Entity instead of a SPE
• If the borrower is structured as a TIC, each tenant in common must be an SPE

Eligible Property Types:

• Standard multifamily housing
• Student housing
• Senior housing
• Manufactured housing communities
• Targeted Affordable Housing