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Freddie Mac Loans

Commercial Property Financing For Multifamily Housing
  • Freddie Mac offers a diverse portfolio of loan products that can be used for the acquisition or recapitalization of multifamily housing. For multifamily projects that meet program requirements, Freddie Mac is often the preferred program regardless of the specific type of housing. It’s widely used to purchase and refinance small and large projects of different housing types.

Common Freddie Mac Multifamily Loan Terms

Each Freddie Mac program sets its own qualification requirements, but most multifamily loan programs have terms that fall within these general guidelines:

Amount borrowed: $1 million+


Duration: 5 - 30 years for fixed-rate

Leverage: 80% loan to value maximum

Recourse: Non-recourse (basic carve-outs)

Prepayment: Often if repaid too early

Rate locks: Both early and extended available

Borrower requirements normally stipulate that the borrower must have a net worth equal to at least the full loan amount, along with minimum total liquidity of 10 percent of the amount borrowed (excluding retirement accounts).

Advantages of Freddie Mac Loans

The various multifamily loan programs that Freddie Mac offers have multiple features that make them attractive financing options:

  • Freddie Mac multifamily loans provide access to millions in borrowed capital.
  • Freddie Mac multifamily loans have flexible terms ranging from 5 - 30 years.
  • Freddie Mac multifamily loans are non-recourse for all principals of an organization.
  • Freddie Mac offers specialized multifamily financing for senior, student and affordable housing.

Disadvantages of Conventional Loans

Despite the multiple advantages that Freddie Mac multifamily housing offers, there are some drawbacks that make it undesirable for certain projects:

  • Freddie Mac multifamily loans terms don’t allow for financing of smaller (1-4 unit) properties
  • Freddie Mac only has a few multifamily loan programs that allow for mixed-use properties.
  • Freddie Mac multifamily loans have prepayment penalties if paid off early.
  • Freddie Mac multifamily financing tends to have fairly standard interest rates and LTVs.

Unprecedented Access To Commercial Loan Options

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What Are Freddie Mac Multifamily Loans?

The Federal Home Loan Mortgage Corporation (Freddie Mac) has a variety of commercial real estate loan programs available, including programs for both single-unit and multifamily housing.

The multifamily loan programs that Freddie Mac offers are generally for structures that have five or more units, which may be in a single building or spread out across multiple structures. Loans are also available for much larger projects, with no real maximum on the number of units a project can have. (Programs have maximum amounts that can be borrowed.)

All of Freddie Mac’s loan programs have certain requirements that must be met, and there isn’t room for negotiation on requirements. Most real estate investors are able to qualify for at least one of the programs, however, because there are so many different multifamily financing options available.

The government-sponsored agency’s various programs can be categorized according to interest rate structure, type of housing, and specialized programs.

Freddie Mac Fixed-Rate Loans

The Freddie Mac Fixed-Rate Conventional is one of the agency’s most flexible loan programs. These loans can be used to finance standard housing projects, as well as affordable housing (Section 8 and certain LIHTC), senior housing, student housing, and even housing cooperatives.

Loan commitments for these are often made within 45 days, which is faster than many of Freddie Mac’s more stringent programs.

Fixed-rate conventional loans are able to be used for so many different projects because they have flexible terms, which can be adjusted for a particular project’s needs. Loan applications for these loans can receive commitments within 45 days, which is faster than many of Freddie Mac’s more stringent programs.

Freddie Mac Fixed-Rate Terms

Use: Both acquisition and refinancing

Amount Borrowed: $5 million - $100 million (flexible)

Duration: 5 - 10 years for most, possible 30 years

Leverage: 75 or 80% LTV, depending on term and payment structure

Recourse: Non-recourse (basic carve-outs)

When to use: The faster commitment times of fixed-rate loans make these a default option when there’s pressure to complete an acquisition or refinance. They’re also one of the default choices for projects that don’t meet other programs’ requirements.

Freddie Mac Floating-Rate Loans

Freddie Mac Floating-Rate Conventional is a similarly flexible loan program but tends to be more well-suited when a property is expected to be refinanced or sold within a short time frame. The loans are frequently used as bridge financing when making acquisitions, and they’re also used for multi-use projects.

Floating-rate conventional loans normally come with some of the lowest interest rates that Freddie Mac offers, although the rate can fluctuate (including increase) as market interest rates change.

The flexible terms also allow projects to have a certain amount of commercial space, which makes it one of the select Freddie Mac programs that accommodates multi-use projects. It’s also a suitable option for standard housing projects, affordable housing, senior housing, student housing, and manufactured housing. Affordable housing can’t be financed this way.

Loan commitment can be completed in just 45 days, and usually falls within the same range as fixed-rate loans.

Freddie Mac Floating-Rate Terms

Use: Most often as a bridge or for short-term investments.

Amount Borrowed: $5 million - $100 million (flexible)

Duration: 5, 7, or 10 years

Leverage: 75 or 80% LTV, depending on term and payment structure

Recourse: Non-recourse (basic carve-outs)

When to use: Short-term projects can take advantage of the lower interest rates, while mitigating potential risk of rate increases in coming years. These loans are frequently used when temporary financing is needed for a purchase, or renovation before selling.

Freddie Mac Floating-to-Fixed-Rate Loans

Freddie Mac Floating-to-Fixed Rate Conventional combines the short-term benefits of floating conventional loans and longer-term benefits of fixed-rate loans. Borrowers can take advantage of low-cost variable financing for 24 months, and then lock in a fixed rate for the remaining term of the loan.

These loans can be used for most standard housing projects and affordable housing. Other types of housing are excluded from the program’s terms. Terms vary significantly depending on the specifics of a project.

Freddie Mac Floating-to-Fixed-Rate Terms

Use: Most often for acquisition

Amount Borrowed: Varies

Duration: 9 years (2 variable / 7 fixed)

Leverage: Maximum LTV varies

Recourse: Non-recourse (basic carve-outs)

When to use: The introductory variable interest rate allows borrowers to quickly invest more in their property. These loans also allow borrowers to quickly sell, or to hold onto a property for longer.

Freddie Mac Small Balance Loans

Freddie Mac Small Balance makes financing available for smaller multi-unit residential properties. The program was created to compete with Fannie Mae’s programs and is often more affordable than privately insured loans.

These loans are available for properties that have at least five units, and they’re primarily used to purchase or refinance smaller multifamily buildings. Many individuals use these loans as they break into the multifamily rental market.

Freddie Mac Small Balance Terms

Use: Both acquisition and refinancing

Amount Borrowed: $1 million - $7.5 million

Duration: 5 - 20 years

Leverage: 80% LTV maximum

Recourse: Non-recourse (basic carve-outs)

When to use: Anyone purchasing a smaller multifamily property might use these loans. They tend to be especially attractive options when purchasing in major metropolitan markets, where values for even smaller properties can be in the millions.

Freddie Mac Green Advantage Loans

Freddie Mac Green Advantage is an environmentally focused program that can complement many of Freddie Mac’s other programs. It’s compatible with conventional, affordable, and senior housing.

In order to qualify for the Green Advantage program, investors must obtain a “Green Assessment” and commit to reducing water/sewage usage by 25%. In exchange, the program allows for higher LTV values and higher DSCR ratios. Investors also can receive a rebate of up to $3,500 for the assessment.

Freddie Mac Green Advantage Terms

Use: Rebate and more favorable terms

Amount Borrowed: Varies

Duration: 2 years to complete improvements

Leverage: +5% LTV maximum

Recourse: Non-recourse (basic carve-outs)

When to use: Any investor may use the Green Advantage program in order to make their buildings more environmentally friendly, and the program can be combined with other incentives. Reducing water/sewage is particularly helpful when a landlord pays the building’s water bill.

Freddie Mac Student Housing Loans

The Freddie Mac Student House was created as a response to the student housing boom seen in recent decades. The program offers favorable terms for investors looking to enter or expand within this sector of the real estate market.

Freddie Mac Student Housing Terms

Use: Both acquisition and refinancing

Amount Borrowed: $5 million - $100 million (flexible)

Duration: 5 - 10 years for most, possible 30 years

Leverage: +75 or 80% LTV, depending on term and payment structure

Recourse: Non-recourse (basic carve-outs)

When to use: Such substantial loan amounts make the Freddie Mac Student Housing program suitable for mid-sized and large student housing apartments or townhomes.

Freddie Mac Senior Housing Loans

Freddie Mac Senior Housing was created to promote investment in specialized housing for older Americans. These loans can be used for independent living, assisted living, skilled nursing, memory care, and age-in-place properties.

Because senior housing projects are often sizeable and have specific design considerations, building or purchasing these properties often requires substantial capital. Senior Housing loans provide access to capital with still-favorable terms.

Freddie Mac Senior Housing Terms

Use: Both acquisition and refinancing

Amount Borrowed: $5 million - $100 million (flexible)

Duration: 5 - 10 years for most, possible 30 years

Leverage: 70 or 75% LTV, depending on term and payment structure

Recourse: Non-recourse (basic carve-outs)

When to use: Freddie Mac Senior Housing loans are frequently used to finance senior housing projects, which have special considerations and costs that are outside what many other loan programs allow.

Freddie Mac Manufactured Housing Loans

Freddie Mac Manufactured Housing makes financing available for multi-unit manufactured housing developments. Mobile home parts and other manufactured housing developments may be financed through the program.

Freddie Mac Manufactured Housing Terms

Use: Both acquisition and refinancing

Amount Borrowed: $1 million+

Duration: 5 - 10 years for most, possible 30 years

Leverage: 75 or 80% LTV, depending on term and payment structure

Recourse: Non-recourse (basic carve-outs)

When to use: The long terms and high loan-to-value ratios make these loans attractive options when financing manufactured housing developments. Spreading out repayment over 10+ years keeps DSCR ratios lower, and affords more revenues can go toward improvements or disbursements.

Freddie Mac Supplemental Loans

Freddie Mac Supplemental program provides additional financing available with terms that are much like these other programs. The loans make funding available for expenses beyond the purchase price of a building.

Freddie Mac offers two different types of supplemental loans, with the difference lying in when the loans are taken out. Split Supplemental Loans originated simultaneously with the primary Freddie Mac mortgage. Seasoned Supplemental Loans are originated at least 12 months after a primary mortgage is originated.

Freddie Mac Supplemental Terms

Use: Supplemental financing

Amount Borrowed: $1 million+

Duration: May exceed primary loan by 24 months

Leverage: 75 or 80% LTV, depending on term and payment structure

Recourse: Non-recourse (basic carve-outs)

When to use: Supplemental loans may help manage unexpected costs, significant repairs, or major improvements. They also can ease cash flow in certain situations.

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