Freddie Mac Moderate Rehab Loan

About the Moderate Rehab Loan

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.

Recourse: Loans are non-recourse with standard carveouts for “bad boy” acts

Program Highlights & Terms

• 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 be finished within 36 months from loan origination Get Free Fredie Mac Loan Quote

Terms are indicative and set by Freddie Mac underwriting for your specific property.