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Freddie Mac Green Advantage Loans

Subsidized Financing For Energy And Water Improvements In Affordable Properties
  • The country has made substantial commitments to lower energy use and preserve natural resources. Federally subsidized Freddie Mac Green Advantage loans encourage and enable commercial real estate investors who have highly affordable properties to make energy and water improvements.

Freddie Mac Green Advantage Loan Highlights


LTV: The maximum loan-to-value ratio is increased by +5%.

DSCR: The minimum discounted service coverage ratio is decreased by -0.05x.

Interest Rate: The interest rate is competitive, and usually based on the primary loan. See current LIBOR rates.

Advantages of Freddie Mac Green Advantage Loans

Freddie Mac Green Advantage loans have a few advantages that make them helpful if improving a property’s energy and/or water usage:

  • Maximum Allowed LTV: Increases the maximum allowed LTV value of a primary loan.
  • Minimum Required DSCR: Decreases the minimum required DSCR value of a primary loan.
  • Rebates Available: For energy assessments and/or industry certifications.

Disadvantages of Freddie Mac Green Advantage Loans

In order to receive the benefits of Freddie Mac Green Advantage loans, borrowers must comply with specific program requirements. The disadvantages of these loans are that:

  • Energy Assessment Required: The cost of which might exceed the amount reimbursed for an assessment.
  • EPA Portfolio Manager: Required to enter energy and water usage into an EPA Portfolio manager for several years.
  • Requirements: Required that properties meet affordability criteria.

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What is the Freddie Mac Green Advantage Program?

The Freddie Mac Green Advantage program provides secondary financing for energy and water-saving improvements. Loans are available for improvements to highly affordable multifamily properties. The terms are advantageous and can cover a significant portion of the cost of making improvements.

What Properties Qualify for Freddie Mac Green Advantage Loans?

Freddie Mac Green Advantage loans are available for “deeply affordable” multifamily properties. Affordability is determined by an affordability test. A preliminary test can be self-completed online with an account, or a lender can help make sure that a property meets the test’s requirements.

The project being funded must also reduce energy and/or water usage substantially. Energy usage must be reduced by at least 15%, and energy or water usage must be reduced by another 15%. 

The total requirement is thus a 30% reduction in energy and/or water, with at least half of that being energy savings. Reductions are based on either a Green Assessment or a Green Assessment Plus. Investors have 2 years to complete the improvements.

Some allowance for commercial space allows multi-use properties to qualify for these loans, so long as they still mainly have affordable housing.

What Loan Programs Does Freddie Mac Multifamily Green Advantage Offer?

The Freddie Mac Multifamily Green Advantage program offers several different loan programs. Other rebates are also available.

Green Advantage Loan Programs

Green Up: One of the two main Green Advantage loan programs, financing 30% improvements. Improvements are based on a Green Assessment (see below).

Green Up Plus: One of the two main Green Advantage loan programs, financing 30% improvements. Improvements are based on a Green Assessment Plus (see below).

Green Retrofits: Reduced financing for energy/water-saving improvements made within the past 2 years.

The Green Up program provides funding for up to 50% of the improvement costs. The Green Up Plus program funds up to 75% of the costs.

Green Advantage Rebate programs

Green Assessment: A basic energy/water usage audit that’s reimbursable for up to $4,000.

Green Assessment Plus: A detailed ASHRAE Level 2 energy/water usage audit, reimbursable up to $4,000.

Green Certified: Properties with green building certifications may receive discounted loan pricing. Certifications include EarthCraft, EnergyStar, Green Communities, Green Globs, GreenPoint Rated, LEED, NGBS, PHIUS, and PHI.

Green Rebate: Investors who don’t participate in another program can receive a $5,000 rebate for delivering an EPA EnergyStar Score.

What Features Do Freddie Mac Green Advantage Loans Come With?

Freddie Mac Green Advantage loans serve as secondary loans on affordable multifamily properties, and they can be added to most other Freddie Mac loans for multifamily properties. The primary terms that must be met remain those of the primary loan.

Most terms are governed by those of the primary loan. The Green Advantage loan only modifies some of the requirements, such as LTV and DSCR. Because the Green Advantage only modifies another loan, maximum LTVs and minimum DSCRs can vary.

Can Borrowers Participate in Multiple Freddie Mac Green Advantage Programs?

Borrowers that are applying for a Green Up or Green Up Plus loan are required to obtain an energy audit, which is respectively reimbursable through the Green Assessment or Green Assessment Plus program. In this case, borrowers can receive a loan and energy audit reimbursement.

Borrowers may not be able to take advantage of certain other programs if applying for a Green Up or Green Up Plus loan. For example, the Green Certified rebate is only available if not participating in another part of the Freddie Mac Green Advantage Program.

What Are the Interest Rates for Freddie Mac Green Advantage Loans?

The interest rates that Freddie Mac Green Advantage loans come with are competitive and based on the current market. Specific rates vary depending on borrow qualifications, but the rates tend to be quite favorable.

How Long Do Borrowers Have to Make Energy Improvements?

Borrowers generally have 2 years to make the improvements outlined in a Freddie Mac Green Advantage loan application, and energy/water usage data must be submitted within 4 years. The Green Retrofits loan is available for improvements made in the past 2 years.

Are Investors Personally Liable for Freddie Mac Green Advantage Loans?

Like most Freddie Mac loans, Green Advantage loans are non-recourse (with bad-boy carve-outs). Individual investors generally aren’t held personally liable for nonpayment or default.

What Loans Can Freddie Mac Multifamily Green Advantage Loans Be Added To?

Freddie Mac Multifamily Green Advantage loans are compatible with most Freddie Mac multifamily loans. Non-Freddie Mac loans are unlikely to allow the higher LTV and lower DSCR that Green Advantage loans usually provide.

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