A Freddie Mac Multifamily Loan offers incredible financing solutions to investors looking for multifamily loans. Freddie Mac's multifamily loan program provides both fixed rate and floating rate multifamily loans to acquire or refinance a wide variety of multifamily properties. These apartment building loans are used to finance properties such as market-rate apartments, student housing, senior housing, and affordable housing. While Freddie Mac has always been one of the industry's most aggressive financing source for larger apartment loans, Fannie Mae used to really dominate the smaller balance market. However, in 2014, Freddie Mac launched their Freddie Mac Small Balance Multifamily Loan program to compete with Fannie Mae in the small balance market. For eligible borrowers, Freddie Mac multifamily loans offer some of the best terms and rates in the market. However, qualifying for Freddie Mac loans requires that the borrower and property both meet a high standard set by Freddie Mac. Borrowers must typically meet a threshold for net worth and liquidity and properties must be cash flowing with at least 90% occupancy for 90 days.
Freddie Mac Multifamily Loan Benefits
Freddie Mac Multifamily Loan rates start as low as 5.51%(as of November 20th, 2024) • A commercial mortgage broker with over 30 years of lending experience
• No upfront application or processing fees
• Simplified application process
• Up to 80% LTV on multifamily
• Terms and amortizations up to 30 years
• Loans for purchase and refinance, including cash-out
• 24 hour written pre-approvals with no cost and no obligation
Our Reviews
Apartment Loan Basics
Top Freddie Mac Multifamily Loan Options for 2024
The Freddie Mac multifamily loan program continues to offer a range of attractive features for apartment purchases and refinances, with a minimum loan size of $1,500,000. The application process remains straightforward and efficient. For instance, tax returns for the borrower and the property are not required. Freddie Mac Multifamily Loans typically close within 45 days and have significantly lower costs compared to other government or agency programs. These loans are non-recourse, meaning the borrower is not required to personally guarantee payments. Prepayment penalties are flexible, ranging from yield maintenance to soft stepdown options. One of the standout features is that Freddie Mac provides a free rate lock for 45 days from application, ensuring the loan rate is held from the application date if rates fluctuate during processing.
Freddie Mac Multifamily Loans aim to promote stability in the U.S. housing and mortgage markets. Their mission includes maintaining a well-financed housing market and promoting affordable housing. This support helps investors purchase, refinance, preserve, and renovate existing multifamily and apartment buildings. Many properties financed by Freddie Mac are over 10 years old, require significant improvements, and often struggle to secure financing from other lenders. Freddie Mac's primary focus in the multifamily sector is affordable housing. Approximately 90% of their apartment loans are for properties with affordable rents based on local median incomes. The demand for rental housing has grown, leading to a shortage of affordable apartment units. Freddie Mac's programs are designed to address this challenge by financing properties that are affordable to lower-income renters and subsidized housing that assists individuals with very low incomes. These efforts ensure that Americans have access to affordable housing nationwide.
One aspect to consider with Freddie Mac multifamily loans is that Freddie Mac does not directly originate these loans. Instead, they rely on authorized lenders within their Optigo network to underwrite and service the loans. While these loans are financed by external lenders, they must all conform to Freddie Mac guidelines. Although Freddie Mac offers loans in various markets for numerous situations, each Optigo lender may have its own limitations on the deals they are willing to finance. At Select Commercial Funding, we provide access to a diverse range of Freddie Mac funding solutions, ensuring that we can connect you with the right Freddie Mac lenders for your specific needs.
The Freddie Mac SBL multifamily loan program offers many unique and beneficial features for apartment purchases and refinances, with a minimum loan size of $1,500,000. The loan application process is simple and streamlined. As an example, tax returns for the borrower and the property are not required. Loans typically close in 45 days and the program has much lower costs than other government or agency programs. Loans are non-recourse, which means that the borrower is not required to guarantee payments personally. Prepayment penalties are flexible, ranging from yield maintenance to soft stepdown. Perhaps the best feature is that Freddie Mac offers a free rate hold for 45 days from application. If rates change during the processing period, the loan rate is automatically held from the date of application.
Freddie Mac is one of the biggest sources of multifamily loans in the country. In October 2014, they announced the addition of their Small Balance Program (SBL) apartment financing. The SBL program finances loans between $1,500,000 and $7.5 million ($6 million in smaller markets). Freddie Mac purchases loans from lenders and securitizes pools of over $400 million. Since their inception, they have funded over 10,385 loans totaling over $27 billion in volume.
Freddie Mac SBL Highlights:
Terms: Freddie Mac SBL offers multiple different loan term options. You can pursue a standard 5, 7 or 10 year fixed rate balloon mortgage. Additionally, they offer 20 year hybrid products with an initial fixed period of 5, 7 or 10 years followed by six-month floating-rate reset periods based on the LIBOR. They offer partial or full term interest only periods as well.
Amortization: The SBL program offers amortization periods of up to 30 years.
Interest Rates: While interest rates vary across properties, locations and loan amounts, they tend to be lower for apartment buildings in Top and Standard Markets and higher for those in Small and Very Small Markets.
Market Tiers:
Top Markets: These include many counties within the following MSA’s: Boston, Chicago, Denver, Los Angeles, Miami, Minneapolis, New York, Portland, San Diego, San Francisco, San Jose, Seattle, Stamford and Washington D.C.
Standard Markets: These typically include markets with a rental population of greater than 60,000 people.
Small Markets: These usually include markets with rental populations between 30,000 and 60,000 people.
Very Small Markets: These include markets with rental population of under 30,000 people.
LTV and DSCR: Freddie Mac SBL will finance up of 80% LTV of the property. Additionally, their loans are subject to a minimum DSCR of 1.25x for Standard Markets and 1.20x for Top Markets. Their full-term interest-only loans are subject to a maximum LTV of 65% and a minimum DSCR of 1.35x.
Borrowers: The Freddie Mac SBL lends to limited liability companies, limited partnerships, single asset entities, special purpose entities, tenancy in common, corporations, multiple asset entities, trusts with a warm body guarantor and individuals who are U.S. citizens.
Underwriting Guidelines:
Effective gross income is calculated based on either trailing three-months of actual rent collections or by annualizing the current rent roll. A 5% vacancy rate is utilized subject to current market data.
Typically, operating expenses are calculated based on the T-12 statement.
Property values will ultimately be based on the third-party appraisal.
A sum of $200-$300 per unit will be escrowed for replacement reserves range. This number is based on the property condition rating and the observations from the property inspection.
For loans over 65% LTV, tax escrows are required.
Prepayment Penalties: Prepayment on Freddie Mac SBL loans vary by term but both yield maintenance and step-down are offered.
Property Type: The SBL program will finance multifamily properties with 5 or more units. They accept section 8 vouchers/ tax abatements and properties may include commercial income. They will not finance seniors housing, student housing (if the student occupancy is over 50% of the tenant base) and properties with land use restriction agreements or low-income housing tax credit. While there are many options for those looking for apartment loans, the Freddie Mac SBL program can often provide some of the best terms in the market.
If you are looking for a Freddie Mac multifamily loan, commercial mortgage or an apartment loan and want to know if the Freddie Mac SBL program is right for you, please do not hesitate to reach out to the professionals at Select Commercial. You can reach us at 877-548-9454. For a quick quote, click the button below!
The Freddie Mac SBL program offers a combination of benefits and features not available anywhere else. Whether your objective is to buy additional property, get a lower rate on an existing loan, or take cash out of an existing property, Freddie Mac has the strength and expertise to get you to the closing table faster than most other lenders.
Freddie Mac Fixed Rate Conventional Multifamily Loans
The Freddie Mac Fixed Rate Conventional Loan offers multifamily investors incredibly attractive financing and loan terms. Freddie Mac Fixed-Rate Conventional Loans can be utilized to finance standard multifamily properties, student housing, seniors housing, cooperative housing developments, and targeted affordable housing properties, including Section 8 housing. These loans are non-recourse so investors don’t have to personally guarantee the loan (except for standard bad boy carve outs). Through this program, we can help you find flexible terms and amortizations of up to 30 years and can offer financing up to $100 million.
Freddie Mac Fixed Rate Conventional Multifamily Loan Highlights
Loan size: $5-$100 million (will consider smaller and larger loans on a case by case basis)
Use: Acquisition or Refinance
Term Length: 5- to 10-year terms (up to 30 years if loan is not purchased for securitization)
Amortization: Up to 30 years
Interest Only: Yes
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 Requirements: Non-recourse except for industry standard “bad boy” carve-outs
Prepayment Penalties: Yield maintenance until securitized followed by 2-year lock out; defeasance thereafter. No prepayment premium for final 90 days. If loan is not securitized within first year, then yield maintenance applies until the final 90 days. Yield maintenance without defeasance is available for securitized loans at an additional cost.
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
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
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
Section 8 multifamily properties can provide investors with huge returns on their money. You can use a Freddie Mac HUD Section 8 multifamily loan to help finance the purchase of Section 8 apartment buildings and reap the benefits yourself. This product offers financing for multifamily properties supported by Section 8 project-based contracts or tenant-based vouchers through credit enhancements and/or cash loan purchases. Freddie Mac HUD Section 8 Financing comes in different varieties. Low-Income Housing Tax Credit (LIHTC) properties are eligible for 10 to 30 year terms while non- LIHTC properties are eligible for terms of 5 to 15 years. In addition, this Freddie Mac program allows investors to maximize their leverage with loans up to 90% LTV and as low as 1.15x DSCR for LIHTC properties, and up to 80% maximum LTV and as low as 1.20x DSCR or non-LIHTC buildings.
Freddie Mac HUD Section 8 Financing Highlights
Size: Varies
Term: Cash Loans- 5 year minimum, 15 year maximum
Tax Exempt Financing- 10 year minimum, 30 year maximum
Amortization: Cash Loan- Up to 30 years
Tax Exempt Financing- Up to 35 years
Maximum LTV: Cash Loans- 80%
Tax Exempt Financing: 90%
Minimum DSCR:
For an apartment building with a project-based Section 8 HAP contract, if the property is in an “above average” market and has a physical vacancy of less than 5% at loan’s origination: 1.20x.
When new Low-Income Housing Tax Credit (LIHTC) is present: 1.15x
For an Above Market Long-term Section 8 contract, some excess rent may be underwritten.
For an Above Market Short-term Section 8 contract, the stabilized net operating income must not include the excess Section 8 rent and the mortgage is underwritten according to Freddie Mac’s other requirements for a Short-term Section 8 contract.
Prepayment Penalty: Cash Loans- Defeasance
Tax Exempt Financing: Yield Maintenance
Subordinate Financing: Permitted, providing it meets additional requirements and analysis
Tax and Insurance Escrows: Required
Eligible Borrowers: Must have demonstrated experience in owning and managing similar Section 8 properties
Eligible Properties: Garden, mid-rise, or high-rise apartment buildings and complexes with Section 8 project-based contracts or vouchers
Type of Section 8 Subsidies:
Project-based subsidy: This type of subsidy deals with rental assistance that is associated with a given property as opposed to specific tenants. The property gets a cash payment based on the number of qualifying tenants living in qualifying apartments. This contractual basis for the subsidy is referred to as Housing Assistance Payments (HAP) or Section 8 contract.
Tenant-based subsidy: This subsidy is rental assistance that is rooted in specific tenants rather than a specific apartment building. The property receives a cash payment based simply on the number of qualifying tenants. Written authorization, known as a voucher, is provided to the tenant for this subsidy. There are two types of vouchers:
Regular vouchers – These are the most common form of vouchers. Payment is generally maxed at the applicable HUD Fair Market Rent, which is a rent ceiling established by HUD for a specific geographic area.
Enhanced vouchers – These are special vouchers that are given to tenants in a property that had previously been receiving a project-based subsidy but will no longer be eligible. Typically, this is because the owner has opted out of the Section 8 program or prepaid an FHA or HUD Mortgage. Tenants in these buildings may qualify for enhanced vouchers to assist them to pay the new higher rent for their apartment. The payment standard is typically set at the actual rent to be charged at the property after the Section 8 subsidy terminates.
Other Terms: For the purposes of Freddie Mac underwriting, the Section 8 subsidy is classified as one of the following:
Long-term Section 8 contract- can either be a brand new 20-year contract or an existing contract that has a remaining term length equal to or greater than the term of the loan
Short-term Section 8 contract- has a remaining term of less than the term of the mortgage
Other definitions pertinent to the Section 8 subsidy are as follows:
Above Market, which refers to Section 8 rents that are higher than the achievable market rent (rents above market are excess rent)
At or Below Market, which refers to Section 8 rents that are equal to or lower than the achievable market rent
Freddie Mac Structured Pool Transaction Multifamily Loans
Freddie Mac Structured Pool Transaction multifamily loans offer a unique financing solution for those with substantial multifamily assets. This program is ideal for borrowers who want customized financing for their larger properties and/or portfolios. Since this program utilizes a loan component structure, borrowers have more flexibility on individual property strategy as the debt is not assigned at the asset level. Plus, the Freddie Mac Structured Pool Transaction Multifamily Loans program offers highly tailored and versatile loan terms such as a mix of fixed- or floating-rate debt, laddered maturities, different prepayment structures, and flexible release options. Most products offered by Freddie Mac are applicable such as conventional, targeted affordable, seniors housing, student housing, and manufactured housing communities.
Freddie Mac Structured Pool Transaction Multifamily Loan Highlights
Pool Size: Generally $400 million or above (smaller UPBs will be considered)
Terms: Up to 30 years fixed rate, up to 10 years floating rate, or a mix of both
Rate Index: Fixed-rate: U.S. Treasury Securities
Floating-rate: 1-month LIBOR index
Eligible Products: Program is eligible for most product types currently offered by Freddie Mac such as conventional, targeted affordable, seniors housing, student housing, manufactured housing communities.
Rate Lock: Early rate-lock option is available, typically ranging from 60 to 120 days until Freddie Mac purchase. Index Lock and Standard Delivery are also available
Recourse: Loans are non-recourse except for standard “bad boy” carve-outs
Prepayment Penalty: Variety of prepayment options available
Interest Only: Full and partial term interest-only options available
Cross Collateralization: Choice of both crossed and uncrossed loans
Release from Cross Collateralization: Freddie Mac offers flexible release options. However, release options may be subject to pool level LTV/DSCR test and premium payment, depending on specific deal structure
Assumptions: Available for uncrossed pools. Assumptions on a crossed pool may be permitted on a case-by-case basis
Supplemental Loans: Available subject to specific requirements found in Freddie Mac underwriting guidelines; additional loan-level or aggregate loan-to-value (LTV), debt service coverage ratio (DSCR) and net operating income tests may be needed
Freddie Mac Manufactured Housing Community Apartment Loans
Freddie Mac offers highly customized multifamily loans for borrowers investing in Manufactured Housing Communities (MHC). Freddie Mac Manufactured Housing Community Apartment Loans provide a highly affordable housing option for underserved populations where MHCs are a vitally important, and sometimes the only, source of affordable housing. With competitive pricing, flexible financing options, certainty, and speed of execution, these loans are a great option for borrowers looking to invest in MHCs. Typical loans will be non-recourse and eligible properties can qualify for up to 80% LTV. Additionally, Freddie Mac offers these loans in flexible 5, 7, and 10-year terms, with amortizations of up to 30 years. This provides high versatility to help satisfy each MHC borrower’s individual financing needs.
Freddie Mac Manufactured Housing Community Apartment Loan Highlights
Loan size: $1 and up
Use: Acquisition or Refinance
Term Length: Up to 5-, 7-, and 10-year terms; longer term loans considered on a case-by-case basis
Amortization: Up to 30 years
Interest Only: Yes
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 Requirements: Non-recourse except for industry standard “bad boy” carve-outs
Prepayment Penalties: Yield maintenance until securitized followed by 2-year lock out; defeasance thereafter. No prepayment premium for final 90 days. If loan is not securitized within first year, then yield maintenance applies until the final 90 days. Yield maintenance without defeasance is available for securitized loans at an additional cost.
Loan Assumability: Loans are assumable with lender’s permission. A fee of 1% assumption fee will be payable to Freddie Mac.
Eligible Borrowers:
A key principal should have two or more years of experience in operating MHCs and should own one other MHC property
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: Existing, stabilized, high-quality, and professionally managed manufactured housing communities (MHCs), with or without age restrictions, excluding Seniors Housing Loans
Tax and Insurance Escrow: Typically Required
Replacement Reserves: Typically Required
Other Terms:
The MHC must have at least of five pad sites
The percentage of homes owned by the borrower, borrower-affiliate, or third-party investor cannot exceed 25% in aggregate
Homes must conform to the requirements of the Federal Manufactured Home Construction and Safety Standards Act of 1974 (HUD Code Standards)
Private wells and septic systems are allowed with considerations
Leases cannot contain options to purchase pad site or borrower-owned manufactured homes
Retail sales or financing by borrowing entity of any manufactured homes is not allowed
RV campgrounds and broken condominiums are excluded
Freddie Mac Manufactured Housing Resident Owned Community Loan
Manufactured housing communities are crucial parts of the American residential landscape. In many rural areas, these communities are the only source of affordable housing. Within the MHC arena, there are communities that are actually resident owned- meaning, even Americans on a budget can have an ownership stake within the place that they live. Freddie Mac offers great financing for these resident owned communities. The Freddie Mac Manufactured Housing Resident Owned Community Loan (MHROC) boasts great terms, such as LTV up to 70%, flexible 5 to 30 year fixed-rate terms and amortizations of up to 30 years. In addition, these loans are typically non-recourse, allow supplemental financing, and can be used for both acquisition purposes and seasoned refinancing transactions.
Freddie Mac Manufactured Housing Resident Owned Community Loan Highlights
Minimum UBP Amount: $500,000
Terms: 5 to 30 years
Amortization: Up to 30 years
Interest Rate: Fixed rate only. Floating rate not permitted in this program.
Interest Only: Not permitted. Loans are all amortized.
Eligible Property Types: Properties must be existing, stabilized, and high-quality. Additionally, the communities must be professionally managed.
Eligible Borrowers: Borrower must be a not-for-profit cooperative corporation or association. Shares in the co-op must be sold to shareholders and must entitle the shareholder to occupy a specific pad.
Eligible Transaction Types:
Acquisition/Conversion: An acquisition mortgage on a manufactured housing community which is in the process of converting from a rental property to an MHROC. The MHROC Borrower must be formed prior to rate lock.
Seasoned Refinance: A Refinance Mortgage on an existing MHROC in which the majority of shares are already sold to resident shareholders.
Maximum LTV/Minimum DSCR:
Market-Rate Rental:
Acquisition/Conversion: 70%/1.40x
Seasoned Refinance: 70%/1.40x
Cooperative:
Acquisition/Conversion: N/A/1.15x
Seasoned Refinance: N/A/1.10x
Prepayment Penalties: Yield maintenance until securitized followed by 2-year lock out; defeasance thereafter. No prepayment premium for final 90 days. If loan is not securitized within first year, then yield maintenance applies until the final 90 days. Yield maintenance without defeasance is available for securitized loans at an additional cost.
Requirements For Resident Shareholders:
At rate-lock:
100% of pad sites must be owned by the MHROC Borrower
At least 90% of shares must be owned by resident-shareholders
Additional Considerations:
The percentage of homes owned by the borrower, borrower-affiliate, or third-party investor cannot exceed 5% in aggregate
Replacement reserve escrow required in the amount of at least $50/site/year and $250/borrower-owned manufactured home/year (if included in the collateral)
Private facilities such as wells and septic systems are allowed subject to Freddie Mac guidelines
Rental leases may not contain options to purchase pad sites or borrower-owned manufactured homes
Retail sales or financing by borrowing entity of any manufactured homes or shares in the MHROC Borrower is prohibited
RV campgrounds and broken condominiums are not allowed
Wrap financing, seller financing, mezzanine financing, and preferred equity are not permitted
Freddie Mac will not purchase end loans or loans to individual shareholders
Since 2010, Freddie Mac has originated almost $10 billion through their multifamily student housing loan program. As a leader in the student housing finance sector, they offer extensive experience with this product type and can customize loans to fit every investor’s needs. Their experience with student housing multifamily loans enables Freddie Mac to understand not only student housing’s specific attributes but also the landscape of each market around each American university. Freddie Mac Student Housing Multifamily Loans provide incredibly flexible terms of between 5 and 10 years on loan amounts between $5 and $100 million. They can even lend up to 30 years for non-securitized, fixed-rate loans. Additionally, this program will finance up to 80% LTV and the loans are fully non-recourse. Interest-only student housing loans are available. Finally, Freddie Mac will finance all dedicated student property types including garden, cottage, mid-rise and high-rise properties.
Freddie Mac Student Housing Multifamily Loan Highlights
Loan Amount: $5 million- $100 million
Purpose: Purchase or refinance
Term: 5-10 years (up to 30 years for fixed-rate loans if loan is not purchased for securitization)
Amortization: Up to 30 years
Interest Only: Partial and full term 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: 1.35% DSCR
Partial Term Interest-Only: 1.35% DSCR
Full Term Interest-Only: 1.45% DSCR
7 Year Loan
Amortizing: 1.30% DSCR
Partial Term Interest-Only: 1.30% DSCR
Full Term Interest-Only: 1.40% DSCR
10 Year Loan
Amortizing: 1.30% DSCR
Partial Term Interest-Only: 1.30% DSCR
Full Term Interest-Only: 1.40% DSCR
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
Student housing properties must have a minimum of one bathroom for every two bedrooms.
Each apartment must have its own full kitchen.
Stabilized garden, mid-rise and high-rise multifamily properties that are more than 50% occupied by students.
Supporting college/university must have 8,000 or more students.
Student housing properties located within close proximity to multiple schools that have a combined student body of 8,000 students or more will be considered
Property must be either located less than two miles from college/university or situated on a public transportation route.
Prepayment Penalty: Yield maintenance until securitized followed by 2-year lock out; defeasance thereafter. No prepayment premium for final 90 days. If loan is not securitized within first year, then yield maintenance applies until the final 90 days. Yield maintenance without defeasance is available for securitized loans at an additional cost.
Other Considerations:
Ground lease for land owned by a college or university may be permitted with prior approval
12-month lease is preferred, although a shorter lease of at least nine months will be considered
Parental lease guaranty is preferred by Freddie Mac
Residence halls or other multiple occupancy rooms with a shared common bathroom and centralized dining halls are excluded
Tax and Insurance escrow are generally required
Replacement Reserve deposit required. Generally a minimum of $150 per bedroom or $300 per apartment
Supplemental Loans are available subject to requirements and guidelines in the Freddie Mac loan agreement
Are you thinking about applying for a Freddie Mac multifamily loan for a conventional, seniors, or targeted affordable housing property? If so, you should definitely know that you could receive better terms and rates through the Freddie Mac Green Advantage Loans program. Essentially, Freddie Mac rewards investors who get a Green Assessment and commit to reducing their building's water and sewage usage by 30%. Investors who qualify and “go green” have the ability to receive higher leverage loans with lower interest rates and debt service coverage requirements. In addition, Freddie Mac will even reimburse investors up to $3,500 at closing for the costs of their energy assessment.
Freddie Mac Green Advantage Loan Highlights
Eligible Loan Terms: 7 and 10 year fixed rate terms
Eligible Properties:
At least 50% of the rents must be deemed affordable at workforce housing levels based on the market
80% Area Median Income (AMI) in standard markets
100% AMI in cost-burdened renter markets
120% AMI in very cost-burdened renter markets
150% AMI in extremely cost-burdened renter markets
Consumption Reduction:
Green Up: Must have a reduction of at least 30% of energy or water/sewer (with a minimum of 15% from energy) consumption based on Green Assessment
Green Up Plus: Must have a reduction of at least 30% of energy or water/sewer (with a minimum of 15% from energy) consumption based on Green Assessment Plus
Time to Complete Improvements: 2 years
Loan Proceeds and Sizing:
Debt Service Coverage Ratio (DSCR): -0.05x of policy-compliant DSCR. Subject to lesser of 1.20x or program/product limit
Loan-to-Value (LTV) ratio: +5.0% of policy-compliant LTV. Subject to greater of 85% or program/product limit
Escrows: Borrower must escrow funds for energy/water efficiency work at closing. Amount escrowed will be 125% of cost and will be released as work is completed
Other Considerations:
These programs require third party reports. Green Up requires a Green Assessment and Green Up Plus requires a Green Assessment Plus
Third party reports can cost up to $3,500 and borrower will be reimbursed at loan closing
Green Up and Green Up Plus loans require that borrowers engage with a third-party data collection company, prior to the origination of the loan. The purpose of this company is to collect, input and monitor actual energy and water usage through the term of the loan.
Are you already green? Freddie Mac provides borrowers with discounted loan pricing for both 7- and 10-year fixed-rate loans if at least half of the property’s units are affordable and the property has one of the following eight green building certifications:
EarthCraft, Greater Atlanta Home Builders Association & South Face
ENERGY STAR® for Multifamily, EPA
ENERGY STAR® for Qualified Multifamily High-Rise, EPA
Green Communities, Enterprise Community Partners
Green Globes, Green Building Initiative
GreenPoint Rated, Build It Green
LEED, US Green Building Council
National Green Building Standard (NGBS), Home Innovation Research Labs
Investors can still receive a green rebate even without one of the Green Advantage Options. Borrowers can receive $5000 from Freddie Mac for delivering an EPA ENERGY STAR Score.
Are you looking for a multifamily loan to acquire or refinance a newly constructed apartment building? Look no further than the Freddie Mac Lease Up Multifamily Loans program. Freddie Mac Lease-Up Apartment Loans are available for many different multifamily property types including Conventional, Seniors, and Targeted Affordable buildings. Plus, these loans are non-recourse, can finance up 75% LTV, and permit eligible mixed-use properties. This great product allows borrowers to lock in a low interest rate and fund the loan before the property is fully stabilized. Freddie Mac offers fixed- and floating-rate loans to investors with properties in lease up. Additionally, interest-only options are also available during lease-up period.
Freddie Mac Lease Up Multifamily Loan Highlights
Loan Types:
Offers both fixed and floating rate loans
Interest-only (I/O) is available for the duration of the lease-up period
Terms: 5-10 years
Amortization: 30 years
Maximum LTV:
Refinance Lease Up
Conventional and Targeted Affordable- 75% LTV
Seniors Housing with Independent Living and/or Assisted Living- 70% LTV
Acquisition Lease Up
Conventional and Targeted Affordable- 70% LTV
Seniors Housing with Independent Living and/or Assisted Living- 70% LTV
Minimum DSCR:
Refinance Lease Up
Conventional and Targeted Affordable- 1.30x DSCR
Seniors Housing with Independent Living- 1.35x DSCR
Seniors Housing with Assisted Living- 1.45x DSCR
Acquisition Lease Up
Conventional and Targeted Affordable- 1.35x DSCR
Seniors Housing with Independent Living – 1.35x DSCR
Seniors Housing with Assisted Living- 1.35x DSCR
Minimum Cash Equity Requirement:
Refinance Lease Up
Conventional and Targeted Affordable- 15%
Seniors Housing with Independent Living and/or Assisted Living- 20%
Acquisition Lease Up
Conventional and Targeted Affordable- 25%
Seniors Housing with Independent Living and/or Assisted Living- 25%
Recourse: Non-recourse with industry standard carveouts for “bad boy” acts
Eligible Borrowers: Freddie Mac requires that have experience owning and managing new construction or lease-up properties. In addition, borrowers should be in strong financial standing, and have real estate management expertise with good performance and credit history
Eligible Property Types:
Property should be well constructed and demonstrate strong lease-up trajectory in good locations and strong markets
Student housing and manufactured housing community transactions are not eligible
Stabilization expected within 12 months of closing
Requirements at Closing:
Refinance Lease Up
Property must meet a DSCR of 1.05x
65% of all multifamily units must be occupied at closing
75% of all multifamily units must be leased at closing
For Conventional and Targeted Affordable properties, 100% of units must have Certificates of Occupancy issued
For Seniors Housing with Independent Living and/or Assisted Living, 90% of units must have Certificates of Occupancy issued
Assisted Living properties must have all required licenses authorizing operations
Acquisition Lease Up
Property must meet a DSCR of 1.0x
65% of all multifamily units must be occupied at closing
75% of all multifamily units must be leased at closing
For Conventional and Targeted Affordable properties, 100% of units must have Certificates of Occupancy issued
For Seniors Housing with Independent Living and/or Assisted Living, 90% of units must have Certificates of Occupancy issued
Assisted Living properties must have all required licenses authorizing operations
Does your apartment building need some renovations? If so, Freddie Mac’s Moderate Rehab Loan may be the perfect solution for you. This program provides investors with the necessary funds to renovate their properties at the lowest possible cost. During the renovation process, borrowers can take out an interest only floating rate loan, and rather than accruing interest on unused funds loan proceeds are advanced monthly as requested. This program allows each borrower to achieve his or her financial needs as terms on Freddie Mac Moderate Rehab loans are very negotiable and versatile. These loans have been specifically crafted for investors planning on putting between $25,000 and $60,000 per unit into the property. This program will finance up to 80% LTV of the property’s as is value, offers flexible loan terms and amortizations, and an up to 36-month interest-only period during rehabilitation. Freddie Mac Moderate Rehab Multifamily Loans offer a flexible liquidity option for experienced sponsors who have successfully completed similar rehabilitation projects and who are familiar with Freddie Mac’s loan process.
Freddie Mac Moderate Rehab Multifamily Loan Highlights
Loan Size: Varies, based on LTV and DSCR requirements
Loan Structure:
Loan type: Either float-to-float or float-to-fixed
Conversion: Interim Phase is floating, followed by either floating or fixed Permanent Phase. The interest rate is determined at loan origination
Use: Financing for moderate rehabilitation of multifamily properties
Terms: Varies, typically float-to-fixed-rate structure. Various combinations of floating and fixed-rate structures can be considered on an individual basis. Loans are interest-only during rehabilitation.
Interest-Rate Cap: Required if the loan is not converted to fixed-rate.
Amortization: Varies
Maximum LTV:
Can lend up to 80% of as-is value. If applicable, this will need to be supported by acquisition price.
Similar to construction financing, there will be periodic draws of unfunded loan proceeds to reimburse the sponsor for up to 80% of the renovation costs on a monthly or quarterly basis, as work is completed.
Appraisal has to show 80% as improved LTV (with fully funded renovation proceeds)
Minimum DSCR:
1.20x interest-only “as-is” at initial sizing
As improved underwritten net operating income per appraisal needs to demonstrate a minimum of a 1.30x amortizing DSCR. This will be subject to an appraisal support.
Recourse: Loans are non-recourse with standard carveouts for “bad boy” acts
Prepayment Options:
Float to Float: During interim phase there is a 2% prepayment premium. Afterwards standard Freddie Mac prepay structures are available
Float to Fixed: During interim phase there is a Yield Maintenance prepayment penalty. Afterwards standard Freddie Mac prepay structures are available
Eligible Borrowers: Freddie Mac likes to see that their borrowers have enough net worth, liquidity and experience in the successful completion of similar rehab projects.
Eligible Properties:
Conventional properties planning between $25,000 and $60,000 in repairs/renovations per unit. Minimum of $7,500 per unit set aside for interior renovations
Property DSCR must not go under 1.0x during the rehab process
Seniors housing, student housing, manufactured housing communities, mezzanine financing, and preferred equity with hard pay are not eligible
Rehab Timeline: All rehabilitation work needs to be finished within 36 months from loan origination
Freddie Mac Student Housing Value Add Multifamily Loans
Many student housing properties require rehab in order to make sure the property is up to par. The Freddie Mac Student Housing Value Add multifamily loan program offers investors a great financing solution to easily finance light repairs on their buildings. These loans are specifically crafted for student housing developments with planned repairs of between $10,000 to $25,000/unit. The loan terms on the Freddie Mac Student Housing Value Add Multifamily Loans program are pretty remarkable. They include LTV of up to 85%, interest-only terms and are non recourse. If you are an investor in need of light rehab on your student housing property, this loan program may be right for you.
Freddie Mac Student Housing Value Add Multifamily Loan Highlights
Use: Generally for acquisitions and refinances of eligible Student Housing properties which need moderate upgrades of $10,000 to $25,000 per unit
Terms: 36 months with one 12-month extension (per borrower’s request) and one optional 12-month extension (per Freddie Mac’s discretion)
Interest Rate: Loans come with a floating-rate loan and full-term interest-only. There is no rate cap required.
Maximum LTV/Minimum DSCR: 85%/1.2x. Appraisal needs to include both as-is and as-stabilized values. Additionally, underwriting must support a 75% LTV and 1.35x DSCR based on as-stabilized value
Recourse: Non-recourse with standard carve outs for “bad boy actions”
Prepayment Penalty: Loan is eligible to be paid off at any time with a 1% penalty. No penalty if the loan is refinanced with Freddie Mac.
Eligible Borrowers: Borrowers must have solid experience and expertise with comparable student housing deals. Guarantors must have 1.5x the standard minimum net worth and liquidity requirements.
Eligible Properties:
Properties must have no more than 250 total units or 625 beds
Properties must be well-constructed and in need of modest repairs
Real-estate owned properties in receivership which should have improved performance with slight rehab work
School must have a minimum of 15,000 student enrollment. This is greater than the standard student housing policy minimum of 8,000.
Buildings must be within 2 miles of school campus
Properties must have convenient access to campus by either public transit, shuttle or pedestrian access.
Rehab Requirements:
Rehab must begin within 90 days of loan origination
Rehab must be completed within 33 months of loan origination
Loans will require a scope of work. Rehab budget must be between $10,000 - $25,000 per unit or $4,000 - $10,000 per bed.
Budget must set aside at least 25% to interior improvements
Budget can be adjusted up to 20% without additional consent by Freddie Mac
Up to half of the total budget is allowed to be used for unit interiors
Other Considerations:
Loan is not assumable
No lock out period
For longer term ownership, cash-out is available assuming a completion guaranty on budgeted improvements in an amount at least equal to the cash out funds is in place
The Freddie Mac Supplemental Multifamily Loan program is perfect for investors with Freddie Mac loans who are looking for some additional financing. Freddie Mac Supplemental Multifamily Loans start at a minimum loan size of $1,500,000, can lend up to 80% LTV and are non-recourse. These great terms make this program an incredibly attractive option for investors looking for extra financing to enhance their multifamily properties. There are two types of Freddie Mac Supplemental Loans. The first type is the Split Supplemental Loan. This loan is originated at the same time as the original Freddie Mac loan. The second type is the Seasoned Supplemental Loans. These loans must be originated at least 12 months after the original loan closing. Additionally, Freddie Mac allows borrowers to take out more than one Supplemental Loan during the life of their original Freddie Mac loan, as long as there is a 12-month period after the origination of the previous loan.
Freddie Mac Supplemental Multifamily Loan Highlights
Size: Minimum of $1,500,000 (subject to LTV and DSCR restrictions)
Use: Supplemental financing for current Freddie Mac borrowers
Terms: Supplemental loan must be coterminous with the first loan and must be at least 12 months after origination of the first loan or the most recent prior to the supplemental loan. Supplemental Loan is not available during the final 3 years of the first loan
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: 1.30% DSCR
10 Year Loan
Amortizing: 1.25% DSCR
Partial Term Interest-Only: 1.25% DSCR
Full Term Interest-Only: 1.35% DSCR
Recourse Requirements: Non-recourse except for industry standard “bad boy” carve-outs
Eligible Borrowers: Current Freddie Mac Multifamily borrowers with existing loans
Eligible Properties: Property must be in current good standing and have been purchased through one of the following programs:
Conventional Cash Mortgage Purchase program
Targeted Affordable Housing Cash Mortgage Purchase program
Does your multifamily property need some modest renovations? If so, a Freddie Mac Value Add Multifamily Loans could be the perfect solution for you. This program offers borrowers short-term and cost-effective financing for light property upgrades and renovations. Borrowers receive competitive pricing and lower overall closing costs. Both interest-only and uncapped floating-rate loans are available. As opposed to the Freddie Mac Moderate Rehab Loan program (created to finance substantial renovations) this loan program is intended to fund modest renovations of between $10,000 and $25,000 per unit. With terms like non-recourse loans and LTV up to 85%, the Freddie Mac Value Add program is perfect for multifamily developers who need extra funds to some light rehab work on their properties.
Freddie Mac Value Add Multifamily Loan Highlights
Loan Size: Based on LTV and DSCR requirements
Maximum LTV: 85%
Minimum DSCR: Based on market. Ranges between 1.10x-1.15x
Loan Purpose: Both acquisitions and refinances
Loan Term: Three years with one 12-month extension (per borrower’s request) and one optional 12-month extension (per Freddie Mac’s discretion)
Interest Rates: Floating rate and interest only. No interest rate cap
Prepayment Penalty: Loan can be paid off at any time with 1% penalty. No penalty if the loan is refinanced with Freddie Mac. There is no lock out period.
Eligible Borrowers:
Sponsor must have experience with multifamily property rehabilitation
Sponsor must also have experience in the local market
1.5x the standard minimum net worth and liquidity requirements for guarantors
Eligible Property Types:
Properties must be in good markets and have no more than 500 total units
Freddie Mac Cash Loan for Affordable Housing Preservation
Are you looking to purchase or refinance an apartment building with affordable housing? The Freddie Mac Cash Loan for Affordable Housing Preservation may be the perfect financing solution for you. With flexible options such as 15 year terms, 30 year amortization and LTV up to 80%, this loan makes for an excellent way for investors to preserve affordable housing. Through this program borrowers receive quick and efficient one-stop shopping, lower fees, and interest rate protection for the whole loan term.
Freddie Mac Cash Loans for Affordable Housing Preservation Loan Highlights
Size: Based on LTV and DSCR requirements.
Use: Long term loan for the acquisition or refinance of affordable multifamily properties.
Term: Up to 15 years
Amortization: Up to 30 years
LTV: Maximum of 80% market value
DSCR: Minimum of 1.25x
Eligible Property Types: Garden, mid-rise, or high-rise multifamily properties that meet affordability criteria
Occupancy: Must meet the requirement of 90% occupancy for 90 days
Prepayment Penalty: Yield maintenance or defeasance, depending on the product
Freddie Mac’s Non-LIHTC Forward Multifamily Loans help to both create and maintain affordable housing through flexible transaction terms and certainty of execution at a lower expense to the borrower. Whether the subject property is new construction or a major rehabilitation project, investors can procure the loans they need for affordable multifamily properties funded by public or mission-driven financial investment. This program offers both non-profits and for-profits forward commitments to provide permanent financing upon the successful conversion of the property from the construction phase to the permanent phase. It offers up to 80% LTV with 30-year amortizations. Borrowers looking for unique pricing and execution to create affordable housing should definitely take a look at the Freddie Mac Non-LIHTC Forward Multifamily Loan program.
Freddie Mac Non-LIHTC Forward Multifamily Loan Highlights
Product Description: Program offers unfunded forward commitments for the following:
Affordable housing developed by nonprofits
Affordable and subsidized housing developed by for-profit developers for construction of new multifamily properties or significant rehabilitation.
Eligible Property Types: To-be-constructed or substantially rehabilitated garden, mid-rise, or high-rise multifamily property with either mission-driven or public financial investment
Terms: Fixed rates up to 30 years and floating rates up to 10 years
Construction Loan Term: Up to 36 months
Amortization: Up to 30 years
LTV: Maximum of 80%
DSCR: Minimum of 1.25x
Prepayment Penalty: Yield maintenance or defeasance
Eligible Borrowers:
For Profit Borrowers- at least 10% of the first mortgage UPB must be quantified as a public or mission-driven financial investment
Not For Profit Borrowers- Sponsor needs to be a 501(c)(3) whose primary purpose and tax-exempt status depends on providing affordable housing. In addition, the GP or managing member must be a non-profit entity.
Affordability Requirements:
10% of the units must have rents of no higher than 80% of AMI for the term of the loan
Another 70% of the units must be affordable at or below 80% of AMI, but do not require rent and income restrictions.
20% of the units are allowed to be at market rents
The Freddie Mac Seasoned Loan Pool Credit Enhancement program provides flexible and cost-effective financing options for small financial institutions looking to achieve a loss sharing arrangement with Freddie Mac. This program provides loss sharing options to small financial institutions so they can continue to grow and support affordable housing. Freddie Mac will underwrite the entire pool of seasoned loans and then offer credit protection for a senior position in the loan pool.
Freddie Mac Seasoned Loan Pool Credit Enhancement Loan Highlights
Eligible Customer: Must be either a small financial institution or community bank that has less than $10 billion in assets
Pool Size: $100 million or greater UPB
Collateral: Pool must contain small balance multifamily loans and loans secured by apartment buildings with 9% LIHTC. These loans must have been originated at least one year before the transaction closing date
Structure: Freddie Mac offers flexible structure by customizing the level of credit support for each pool
First-Loss: Customer must maintain a first-loss position in the loan pool
Freddie Mac Guarantee: Through this program, Freddie Mac enters into an agreement in which they will accept responsibility for a senior tranche of credit risk of a particular loan pool. While loans must remain on the customers balance sheet, the credit risk is shared between the customer and Freddie Mac
The Freddie Mac Tax-Exempt Multifamily Loans program (TELs) offers borrowers a cost-effective and efficient solution for those looking for tax-exempt financing. This program helps borrowers save time and money when looking to acquire or refinance affordable multifamily properties with tax-exempt debt. The Freddie Mac TEL is a wonderful alternative to tax-exempt bond credit enhancements with 4% LIHTCs. This program offers immediate funding and forwards and interest-only options. In addition, their streamlined process means less paperwork and expense than traditional bond credit enhancements.
Freddie Mac Tax-Exempt Multifamily Loan Highlights
Product Description: Multifamily financing to either acquire or refinance of stabilized and affordable apartment buildings. Must have 4% Low-Income Housing Tax Credits (LIHTC) and at least 7 more years in the LIHTC compliance period
Type of Funding: Offers both immediate fixed-rate financing and forward fixed-rate financing
Eligible Properties: Garden, mid-rise or high-rise multifamily properties with 4% LIHTC
Occupancy: Minimum of 90% occupancy for 90 days
Collateral: First-lien mortgages of conventional, seniors housing or student housing properties
Term: Up to 30 years
Construction Loan Term: Up to 36 months
Amortization: Up to 35 years
LTV: Maximum of 85% of adjusted value or 90% of market value
DSCR: Minimum of 1.15x
Prepayment Penalty: Yield Maintenance. Minimum of 10 years’ prepayment protection
Other Terms:
Subordinate financing is available
Supplemental loans are available
Escrows for taxes and insurance are required
Transactions will be priced at a spread to 10-year Treasuries
Freddie Mac Bond Credit Enhancement with Other Affordability Components Multifamily Loans
This Freddie Mac Bond Credit Enhancement with Other Affordability Components Multifamily Loans program provides investors with a great financing solution in order to preserve affordable housing. This program offers incredibly flexible transaction structuring, certainty of execution at lower cost to the borrower. The program can be used for different fixed- or variable-rate multifamily housing bonds including: bond refundings, substitutions, or new issue transactions with 80-20 bonds, taxable bonds in combination with tax-exempt bonds, 501(c)(3) bonds, Section 8, Section 236, or tax abatements. With terms between 10- 30 years, amortization up to 30 years and LTV up 90% of adjusted value, this Freddie Mac Bond Credit Enhancement program is definitely worth a look for investors in the affordable housing space.
Freddie Mac Bond Credit Enhancement with Other Affordability Components Multifamily Loan Highlights
Use: Offers both new credit enhancement facility and replacement of existing credit enhancement facility. Eligible for tax-exempt bonds for refundings, substitutions and acquisitions
Terms: 10 to 30 years
Amortization: Up to 30 years
LTV:
Variable-rate with cap hedge: 80% of adjusted value or 85% of market value
Fixed-rate: 85% of adjusted value or 90% of market value
DSCR:
Variable-rate with cap hedge: 1.25x
Fixed-rate: 1.25x
Eligible Property Types: Garden, mid-rise and high-rise apartment buildings
Occupancy: Must have occupancy of at least 90% for 90 days
Prepayment Penalty: Fee maintenance
Recourse: Non-recourse except for standard carveouts for “bad boy” acts
Other Terms:
Subordinate debt is permitted
Escrows for taxes and insurance are required
Appraisal, environmental and engineering reports are required
Freddie Mac Low Income Housing Tax Credits Enhancement Multifamily Loans
Are you currently a borrower with the Freddie Mac Bond Credit Enhancements, Freddie Mac Tax-Exempt Loans (TELs), or Freddie TAH Cash Loans multifamily programs? If so, the Freddie Mac Low Income Housing Tax Credits Enhancement Multifamily Loans program can help to provide you additional protection in the event of a foreclosure. In the event that Freddie Mac forecloses on the property, this program provides investors with a make-whole payment based upon the initial investment. This program assists with mixed-income rental housing financed with Freddie Mac Senior Debt and is just another way Freddie Mac is helping to support workforce housing.
Freddie Mac Low Income Housing Tax Credits Enhancement Multifamily Loan Highlights
Product Description: Provides additional protection in the event of foreclosure to borrowers of Freddie Mac Bond Credit Enhancements, Freddie Mac Tax-Exempt Loans (TELs), or Freddie TAH Cash Loans. In the event that Freddie Mac forecloses on the property, this program provides investors with a make-whole payment based upon the initial investment
Term: 10 years
LTV: Based on senior debt financing requirements
DSCR: Based on senior debt financing requirements
Eligible Borrowers: 80/20 developers. Must be financially capable and have a lot of experience in the relevant market
Property Types: Must be newly developed and stabilized high-rise and mid-rise mixed-income properties, 80/20s, or similar projects
Occupancy: Property must be fully stabilized with low-income tenants
Freddie Mac Preservation Rehabilitation Multifamily Loans
The Freddie Mac Preservation Rehabilitation Multifamily Loans program provides investors with a great financing solution to renovate affordable housing properties with low income housing tax credits. This product can be used with bond credit enhancements with 4% LIHTC, tax-exempt loans with 4% LIHTC and 9% LIHTC cash loans. These loans offer terms of up to 15 years, amortizations up to 30 years, LTV up to 80% of market value, and DSCRs as low as 1.25x.
Freddie Mac Preservation Rehabilitation Multifamily Loan Highlights
Product Description:
Tax-Exempt Financing with 4% LIHTC: Provides investors with tax-exempt financing in order to moderately rehabilitate affordable multifamily properties with a new 4% LIHTC and tenants in place
Tax-Exempt Financing with 9% LIHTC: Provides investors with tax-exempt financing in order to moderately rehabilitate affordable multifamily properties with a new 9% LIHTC and tenants in place
Eligible Property Types:
Tax-Exempt Financing with 4% LIHTC: Must be either garden, mid-rise, or high-rise multifamily properties. Must have 4% Low-Income Housing Tax Credits and be undergoing moderate rehabilitation with tenants in place
Tax-Exempt Financing with 9% LIHTC: Must be either garden, mid-rise, or high-rise multifamily properties. Must have 4% Low-Income Housing Tax Credits and be undergoing moderate rehabilitation with tenants in place
Funding Type: Provides investor with tax-exempt financing for the acquisition and rehabilitation of multifamily properties based on projected post-rehabilitation net operating income
Terms:
Minimum term: Lesser of the remaining LIHTC compliance period or 15 years; 15 years with HUD Risk Sharing
Maximum term: 35 years
A maximum of 2 years for rehabilitation and stabilization period will be included in loan term
Amortization: Up to 35 years
LTV:
Tax-Exempt Financing with 4% LIHTC:
Variable rate with cap hedge: 80% of adjusted value or 85% of market value
Fixed rate: 85% of adjusted value or 90% of market value
Tax-Exempt Financing with 9% LIHTC: 90% of market value
DSCR:
Tax-Exempt Financing with 4% LIHTC:
Variable rate with cap hedge: 1.20x
Fixed rate: 1.15x
Tax-Exempt Financing with 9% LIHTC: 1.15x
Prepayment Penalty:
Tax-exempt Financing with 4% LIHTC- Fee maintenance
Tax-exempt Financing with 9% LIHTC- Yield maintenance
Freddie Mac Tax-Exempt Bond Securitization (TEBS) Multifamily Loans
The Freddie Mac Tax-Exempt Bond Securitization (TEBS) Multifamily Loans program provides liquidity to tax-exempt bondholders investing in the multifamily affordable housing market. Through the TEBS program, the sponsor transfers portfolios of unrated bonds to Freddie Mac in exchange for rated M-class certificates. The sponsor will typically receive Class A- M-Certificates (which are sold to other investors) and subordinate Class-B M Certificates (which are typically kept by the sponsor). This program helps sponsors and investors reduce risk, enhance liquidity, manage balance sheets and improve yields.
Freddie Mac Tax-Exempt Bond Securitization Multifamily Loan Highlights
Product Description: The program allows the sponsor to transfer privately placed tax-exempt multifamily housing revenue bonds to Freddie Mac in exchange for:
Freddie Mac senior Class-A M Certificates that are typically sold to other investors
Subordinate Class-B M Certificates that are usually kept by the sponsor
Amount: Typically equal to or greater than $100 million
Eligible Sponsors:
Freddie Mac Multifamily Optigo Targeted Affordable Housing Seller/Servicers
Other well-capitalized financial institutions will be considered on a case-by-case basis
Eligible Property Types: Multifamily properties
LTV: Maximum 95% per Freddie Mac underwriting
DSCR: Minimum 1.05x
Subordination Level: Usually about 15% of total pool size. However, the number can vary based on quality of the collateral and sponsor needs
Documentation Requirements: Properties require the following documentation (others may be required as well by Freddie Mac underwriting):
Appraisals
Market studies
Rent rolls
Financial statements (both current and historical)
The Freddie Mac Seniors Housing Multifamily Loans program offers incredible financing solutions for borrowers looking to invest in Senior Housing multifamily developments. This program is designed for investors who want to either acquire or refinance properties designated and built as seniors housing properties. It offers flexible, multiple terms for a variety of housing property types — independent living properties, assisted living properties, memory care properties and senior properties with a limited amount of skilled nursing. With terms and amortization up to 30 years and the ability to finance up to 75% LTV, this program is the perfect option for investors looking to expand affordable senior housing.
Freddie Mac Seniors Housing Multifamily Loan Highlights
Use: Funding to acquire or refinance eligible senior housing multifamily properties
Terms: Generally 5 to 10 years (up to 30 years for fixed-rate loans)
Amortization: Up to 30 years
Interest Only: Both full-term and partial-term interest only are available
Maximum LTV:
5 Year Loan
Amortizing: 75% LTV
Partial Term Interest-Only: 70% LTV
Full Term Interest-Only: 65% LTV
7 Year Loan
Amortizing: 75% LTV
Partial Term Interest-Only: 75% LTV
Full Term Interest-Only: 65% LTV
10 Year Loan
Amortizing: 75% LTV
Partial Term Interest-Only: 75% LTV
Full Term Interest-Only: 65% 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: 1.30% DSCR
Partial Term Interest-Only: 1.30% DSCR
Full Term Interest-Only: 1.40% DSCR
10 Year Loan
Amortizing: 1.30% DSCR
Partial Term Interest-Only: 1.30% DSCR
Full Term Interest-Only: 1.40% DSCR
Recourse: Non-recourse with standard carveouts for “bad boy” actions
Eligible Borrowers:
Borrower must be an experienced owner and operator of comparable facilities
Loans under $5 million- borrower may be a Single Asset Entity, limited partnership, general partnership, limited liability company, corporation, or real estate investment trust
Loans $5 million or more- borrower may be a limited partnership, a corporation, or a limited liability company and must be a Single Purpose Entity
If the borrower is structured as a tenancy in common (TIC), each tenant in common must be a Single Purpose Entity
Freddie Mac 9% Low Income Housing Tax Credits Cash Multifamily Loans
Are you looking to purchase, refinance or substantially renovate an affordable property with 9% Low-Income Housing Tax Credits? If so, you’ll definitely want to take a look at the Freddie Mac 9% Low Income Housing Tax Credits Cash Multifamily Loans program. This program is incredibly flexible and can serve a wide array of purposes for different borrowers. The program offers forward commitments, immediate financing and preservation rehabilitation financing. With terms such as a maximum of 90% LTV and DSCR’s as low as 1.15x, this program is the perfect option for investors in affordable housing properties.
Freddie Mac 9% Low Income Housing Tax Credits Cash Multifamily Loan Highlights
Product Description:
Forward Commitment: Provides investors with forward commitments to construct or substantially rehabilitate affordable multifamily properties with 9% low income housing income housing credits
Immediate Funding: Provides borrowers with funding for the acquisition or refinance of stabilized affordable multifamily properties with 9% LIHTC. Properties must have a minimum of 7 years remaining in the LIHTC period.
Preservation Rehabilitation: Provides borrowers with funding for the moderate rehabilitation of affordable multifamily properties with new 9% LIHTC and tenants in place
Terms:
Forward Commitment/ Immediate Funding: Minimum term of the lesser of the remaining LIHTC compliance period or 15 years and Maximum term of 35 years
Preservation Rehabilitation: Minimum term of the lesser of the remaining LIHTC compliance period or 15 years and Maximum term of 35 years. Maximum of 2 years for rehabilitation and stabilization will be included in the loan term
Amortization: Up to 35 years
Loan to Value: 90% LTV
DSCR: 1.15x
Eligible Property Types:
Forward Commitment: Garden, midrise, or high-rise multifamily buildings with 9% low- income housing tax credits that are going to be constructed or significantly renovated
Immediate Funding: Garden, mid-rise, or high-rise multifamily properties with 9% low-income housing tax credits that maintain occupancy levels of 90% for at least 90 days
Preservation Rehabilitation: Garden, mid-rise, or high-rise multifamily buildings with 9% low-income housing tax credits that require moderate rehabilitation and have tenants in place
Type of Funding:
Forward Commitment: Offers investors a bond credit enhancement during construction. Also offers forward commitment to provide bond credit enhancement when the project moves from construction phase to permanent phase
Immediate Funding: Permanent financing
Preservation Rehabilitation: Financing for both the acquisition and rehabilitation based on projected post-rehabilitation net operating income. Maximum rehab period is 2 years. Loans are interest only during the rehabilitation and stabilization period
Prepayment Penalty: Yield Maintenance
Other Terms:
Escrows for taxes and insurance are required
Securitization is only available for immediate financing
Freddie Mac Bridge to Resyndication Multifamily Loans
Are you looking for a bridge loan to acquire or refinance a Low Income Housing Tax Credit (LIHTC) apartment building? The Freddie Mac Bridge to Resyndication Loan provides an incredible solution offering borrowers efficient, short-term and cost effective bridge financing. By utilizing 4 percent LIHTC’s and long term Freddie Mac financing, this program is a much-needed bridge that helps to position properties for further recapitalization. Bridge to Resyndication loans are offered with term lengths of 24-months, allow for LTVs of up to 85%, require DSCRs as low as 1.15x, and are interest-only.
Freddie Mac Bridge to Resyndication Multifamily Loan Highlights
Size: Dependent on LTV and DSCR
Use: Loan is intended for the preservation of affordable housing. Offers short term bridge loans to help borrowers purchase or refinance LIHTC apartment buildings
Term: 24-month loan. Potential one 6-month extension with Freddie Mac approval
Interest Rate: Floating rate and interest only. Based on 1 month LIBOR
LTV: Up to 85%
DSCR: Minimum of 1.15x
Eligible Borrowers: Sponsor must have financial wherewithal and must have successfully completed multiple resyndications utilizing 4% LIHTC and tax-exempt loans
Eligible Properties:
Must be an LIHTC apartment building at or close to the end of LIHTC rent compliance period
Sound construction which is allowed to need moderate repair
Sponsor must have proof that a public agency with license to issue Volume Cap Mortgage Revenue Bonds has enough tax-exempt bond (or loan) availability to meet the allocation needs of the anticipated LIHTC resyndication and has a highly predictable process for that allocation
Other Terms:
Breakage fee of 2%
Exit fee of 2%. Waived if refinanced with a Freddie Mac securitized loan
Extension based on Freddie Mac approval. Will be dependent on current progress toward LIHTC resyndication. Additionally, 0.5% fee is required
Minimum occupancy will be determined at funding using the comparable fixed rate to achieve a 1.0x DSCR
Freddie Mac NOAH Preservation Multifamily Loan Program
The Freddie Mac NOAH Preservation Multifamily Loan Program offers great financing solutions for non-profits looking to preserve American affordable housing. This loan program is designed to assist nonprofit organizations in acquiring Naturally Occurring Affordable Housing (NOAH) apartment buildings in order to maintain rents at affordable prices. The program provides qualifying nonprofits with critical underwriting flexibilities, fee reductions and rehab allowances in order to support their long-term preservation of naturally occurring affordable housing. Some key aspects of the Freddie Mac NOAH Preservation Multifamily Loan Program are that it allows up to 80% LTV, permits DSCRs as low as 1.20x, and has flexible loan terms and amortizations of up to 15 and 30 years respectively.
Freddie Mac NOAH Preservation Multifamily Loan Highlights
Size: Varies based on LTV and DSCR
Use: Provides eligible non-profits with financing in order to support long-term preservation of naturally occurring affordable housing
Term: Up to 15 years
Amortization: Up to 30 years
LTV: Up to 80%
DSCR: At least 1.2x. May allow 1.2x with consent from Freddie Mac
Prepayment Penalty: Yield Maintenance or defeasance
Eligible Property Types: Garden, mid-rise, or high-rise multifamily NOAH properties
Eligible Borrowers: Must be 501(c)(3) nonprofit organizations that list affordable housing preservation as a stated part of its mission. In addition, must have a history of successful property ownership
Minimum Equity Required: Nonprofit must satisfy at least one of these criteria:
Have an equity partner providing mission-focused equity
Contribute 100% of the equity themselves (leveraging soft debt as necessary)
Use the Freddie Mac Impact Gap Financing offering
Other Terms:
At time of loan origination at least half of the apartment units must have affordable rents at 60%, 80%, 100% or 120% area median income (AMI) based on the market.
Freddie Mac Seasoned Loan Securitization Loans Program
The Freddie Mac Season Loan Securitization Loans program (also known as “Q series”) provides liquidity to small financial institutions in order to allow them to continue to grow affordable housing. This program offers a flexible securitization structure and allows these institutions to remove seasoned loans from their balance sheets. Freddie Mac will underwrite the whole pool of seasoned loans and ensures the payment of principal and interest on the securities. In addition, this program offers great terms with LTV up to 80% and a 30 year amortization schedule.
Freddie Mac Seasoned Loan Securitization Highlights
Pool Size: $200 million or greater in UPB
Collateral: Must include small balance multifamily loans and multifamily mortgage loans that are secured by properties with 9% LIHTC. These loans must have been originated at least one year before the Q-deal closing date
Structure: Flexible structures including both a 100% guaranty and a 90% guaranty of the senior certificates.
LTV:
Loans above $1,500,000 allow up to 80% LTV
DSCR:
Loans above $1,500,000 require a minimum of 1.20x DSCR
Freddie Mac Guarantee: Freddie Mac ensures the timely payment of both principal and interest principal on the guaranteed senior certificates.
Freddie Mac Bond Credit Enhancement with 4% LIHTC Multifamily Loans Program
The Freddie Mac Bond Credit Enhancement with 4% LIHTC Multifamily Loan Program is the perfect solution for investors looking to finance properties with low income housing tax credits. This program provides investors with forward commitments to provide bond credit enhancement post-construction or substantial rehab. In addition, this program offers immediate funding for acquisition and refinancing of properties that can maintain 90% occupancy for 90 days. Plus, this program has both fixed and variable-rate options, supports eligible mixed-use properties, and can support DSCRs as low as 1.15x.
Through these options, the Freddie Mac Bond Credit Enhancement with 4% LIHTC Multifamily Loan program helps to preserve affordable housing options with flexible transaction structures, lower costs and certainty of execution.
Freddie Mac Bond Credit Enhancement with 4% LIHTC Multifamily Loans Highlights
Product Description:
Forward Commitment: Provides investors with bond credit enhancement to construct or substantially rehabilitate affordable multifamily properties with 4% low income housing income housing credits
Immediate Funding: Provides investors with bond credit enhancement in order to purchase or refinance apartment buildings that are affordable, stabilized and have 4% low income housing tax credits. Properties must have at least 7 years remaining in the LIHTC compliance period
Preservation Rehabilitation: Offers bond credit enhancement in order to moderately rehab affordable multifamily properties with new 4% LIHTC and tenants in place
Terms:
Forward Commitment/ Immediate Funding: Minimum term of the lesser of the remaining LIHTC compliance period or 15 years and Maximum term of 35 years
Preservation Rehabilitation: Minimum term of the lesser of the remaining LIHTC compliance period or 15 years and Maximum term of 35 years. Maximum of 2 years for rehabilitation and stabilization will be included in the loan term
Amortization: Up to 35 years
Loan to Value:
Variable-rate with cap hedge: 80% of adjusted value or 85% of market value
Fixed-rate: 85% of adjusted value or 90% of market value
DSCR:
Variable-rate with cap hedge: 1.20x
Fixed-rate: 1.15x
Eligible Property Types:
Forward Commitment: Garden, midrise, or high-rise multifamily buildings with 4% low-income housing tax credits that are going to be constructed or significantly renovated
Immediate Funding: Garden, mid-rise, or high-rise multifamily properties with 4% low-income housing tax credits that maintain occupancy levels of 90% for at least 90 days
Preservation Rehabilitation: Garden, mid-rise, or high-rise multifamily buildings with 4% low-income housing tax credits that require moderate rehabilitation and have tenants in place
Type of Funding:
Forward Commitment: Offers investors a bond credit enhancement during construction. Also offers forward commitment to provide bond credit enhancement when the project moves from construction phase to permanent phase
Immediate Funding: Provides borrowers with bond credit enhancement for both fixed and variable-rate tax-exempt bonds
Preservation Rehabilitation: Offers borrowers bond credit enhancement for the purposes of acquiring or rehabilitating multifamily properties. Bond credit enhancement is based on future net operating income after rehabilitation
