Freddie Mac Multifamily Loan Options 

In 2017, Freddie Mac financed $73.2 billion in multifamily and apartment loans. Much like its sister company, Fannie Mae, Freddie Mac offers non-recourse, 30-year fixed-rate loans with up to 80% leverage. While Freddie Mac loans are a great option for market-rate properties, they often offer significant advantages to borrowers attempting to obtain financing for affordable properties, such as HUD Section 8 properties or those being funded with the Low Income Housing Tax Credit (LIHTC).

Despite the incredible benefits of Freddie Mac multifamily financing, it can be somewhat difficult to obtain; Freddie Mac typically puts a strong emphasis on the financial strength of potential borrowers, as well as considering their multifamily real estate experience. In addition, since many Freddie Mac loans are securitized and sold to investors, borrowers will often have to engage in defeasance if they want to prepay their loan.

General Terms for Freddie Mac Apartment Loans in 2019

While Freddie Mac loan terms vary somewhat between products, general terms include:

  • Loan Size: $1 million with no upper limit

  • Loan Term: 5-30 year fixed-rate terms available

  • Leverage: 80% maximum LTV allowance

  • Interest Rates: 3.90%+

  • Rate locks: Yes, both early and extended available

  • Recourse: Non-recourse (standard carve-outs apply)

  • DSCR: Minimum 1.20- 1.25 DSCR

  • Interest Options: Interest-only options available

  • Prepayment: Yield maintenance is permitted until securitization. After securitization, a 2-year lockout period begins, and defeasance is allowed afterward. Prepayments are waived for the last 90 days of the loan.     

  • Borrower Requirements: Just like Fannie Mae loans, Freddie Mac typically requires that principals have a combined net worth of at least 100% of the loan amount, and a combined liquidity of at least 10% of the loan amount (not including retirement accounts).

  • Borrowing Entity: Freddie Mac generally requires the borrower to be structured as a bankruptcy-remote special purpose entity (SPE).


Freddie Mac Multifamily Small Balance Loan Program

In order to compete effectively with Fannie Mae, Freddie Mac introduced the Freddie Mac Multifamily Small Balance Loan Program (Freddie Mac SBL), which allows for faster, more streamlined processing. The Freddie Mac SBL program was recently re-branded as Freddie Mac Optigo, but still provides the same fantastic benefits for multifamily borrowers. In general, the SBL/Optigo program is the most competitive in larger markets (i.e. New York, Los Angeles, Miami), while the Fannie Mae Small program is better suited for secondary and tertiary markets. Freddie SBL offers terms including: 

  • Loan Size: Between $750,000 and $7 million

  • Loan Purpose: Loan can be used for acquisition or refinance

  • Unit Requirements: 5+ units

  • Leverage:

    • Top Markets: 80% maximum LTV allowance for purchases and refinances

    • Standard Markets: 80% maximum LTV allowance for purchases and refinances

    • Small Markets: 75% maximum LTV allowance for purchases, 70% for refinances

    • Very Small Markets: 75% maximum LTV allowance for purchases, 70% for refinances

  • Documentation: No tax return requirement

  • Interest Options:

    • 20-year hybrid ARM with a 5, 7, or 10-year fixed-rate loan period

    • 5, 7, or 10-year fixed-rate loan

  • DSCR:

    • Top Markets: Minimum 1.20 DSCR

    • Standard Markets: Minimum 1.25 DSCR

    • Small Markets: Minimum 1.30 DSCR

    • Very Small Markets: Minimum 1.40 DSCR

  • Assumability: Assumable (with lender approval and 1% fee)

  • Cash Out: Cash out refinances available

  • Prepayment: Step down, yield maintenance, and soft step down options available


Freddie Mac Fixed-Rate Conventional Loans

The Freddie Mac Fixed-Rate Conventional Loan is one of the most versatile forms of multifamily financing from Freddie Mac, as it permits the financing of conventional properties, affordable housing (specifically certain LIHTC and Section 8 properties), seniors housing, student housing, even apartment cooperatives. Plus, borrowers can receive loan commitments in as little as 45 days, which is considerably faster than many other Freddie Mac loans.

Terms include:

  • Size:  $5 million - $100 million (though this is flexible in practice)

  • Use:  Acquisitions and refinances 

  • Terms:  5-10 years (Up to 30 years for non-securitized loans) 

  • Amortization:  Up to 30 years, with I/O payment options 

  • Maximum LTV/Minimum DSCR:  

  • 5-7 Year Loans:

    • Amortizing: 75%/1.30x

    • Partial Term Interest-Only: 75%/1.30x

    • Full Term Interest-Only: 65%/1.40x

  • 7 Year Loans:

    • Amortizing: 80%/1.25x

    • Partial Term Interest-Only: 80%/1.25x

    • Full Term Interest-Only: 70%/1.30x

  • 7+ Year Loans:

    • Amortizing: 80%/1.25x

    • Partial Term Interest-Only: 80%/1.25x

    • Full Term Interest-Only: 70%1.35x

  • Recourse:  Loans are fully non-recourse with standard “bad boy” carve-outs


Freddie Mac Lease-Up Loans

All newly constructed properties undergo a lease-up period directly after construction— but it isn’t always easy to get financing when your property isn’t generating a steady income. Whether you want to refinance a high-interest multifamily construction loan that’s about to come due, or want to purchase a recently constructed multifamily property, a Freddie Mac Lease-Up Loan can help. And, with leverage up to 75% and loan terms up to 30-years (for non-securitized debt), these loans provide incredibly generous terms for all kinds of multifamily investors.

  • Size:  Varies based on debt service and leverage

  • Use:  Purchases and refinances of newly multifamily construction 

  • Terms:  5-10 years (Terms can go up to 30 years for non-securitized loans)

  • Amortization:  Up to 30 years, optional I/O financing

  • Recourse:  Non-recourse with standard carve-outs

  • Maximum LTV/Minimum DSCR:  

    • Refinances:

      • Conventional and Targeted Affordable: 75%/1.30x

      • Seniors Housing with Independent Living: 70%/1.35x

      • Seniors Housing with Assisted Living: 70%/1.45x

    • Purchases:

      • Conventional and Targeted Affordable: 70%/1.30x

      • Seniors Housing with Independent Living: 70%/1.35x

      • Seniors Housing with Assisted Living: 70%/1.45x

  • Minimum Equity Required: 

    • Refinances:

      • Conventional and Targeted Affordable: 15%

      • Seniors Housing Independent or Assisted Living: 20%

    • Purchases:

      • Conventional and Targeted Affordable: 25%

      • Seniors Housing Independent or Assisted Living: 25%

  • Prepayment Penalty: Borrowers may pay yield maintenance until loan is securitized. After securitization, a 2-year lock-out period begins, after which borrowers may conduct defeasance. Borrowers can pay additional upfront fee at closing to opt or yield maintenance. Pre-payment premiums are waived for the final 90 days of the loan. 

  • Rate Lock:  Rate locks issued when property reaches:

    • 50% of unit occupancy

    • 60% of unit leased

    • 60%+ units have Certificates of Occupancy  

  • Eligible Borrowers/Properties: 

    • Borrowers should have significant experience with multifamily construction and lease-up scenarios. Good credit and reasonable net worth/liquidity also required.

    • Conventional, Targeted Affordable, or Seniors Housing (Assisted Living/AL or Independent Living/IL) properties.

    • Manufactured Housing Communities (MHCs) and Student Housing are not permitted.

    • Properties should generally reach stabilization 1 year after closing (or before).

  • Closing Requirements: 

    • Refinances:

      • 1.05x DSCR

      • 65% of units must be occupied

      • 75% of units must be leased

      • 100% of units must have Certificates of Occupancy issued (Conventional and Targeted Affordable)

      • 90% of units must have Certificates of Occupancy issued (Seniors Housing with Independent Living and/or Assisted Living)

      • Assisted Living properties must have all required licenses authorizing operations

    • Purchases:

      • 1.0x Debt Service Coverage Ratio

      • 65% current occupancy/75% of units currently leased

      • For Targeted Affordable or Conventional properties, all units must have a Certificate of Occupancy

      • For Seniors Housing (AL or IL), 90% of units must have a Certificate of Occupancy

      • Assisted Living (AL) developments need state licensing, insurance, and other necessary licensing and documentation

  • Lease-Up Credit Enhancements: Required

    • Lease-Up Credit Enhancement must be a minimum of:

      • 5% of the unpaid principal balance (UPB)

      • 10% of the unpaid principal balance (UPB) if the Lease-Up Credit Enhancement is a guaranty (other rules and conditions may also apply)

    • These funds will be released when the property reaches the appropriate DSCR (usually 1.25x) for a minimum of 90 days and is otherwise in compliance with Freddie Mac rules and regulations

    • If debt service target cannot be met within 12 months, loan resizing will occur, with an associated recast of payments.


Freddie Mac Student Housing Loans

Right now, there are nearly 20 million college students in the United States— and many of them need high-quality, affordable housing. Fortunately, Freddie Mac Student Housing Loans help investors and developers meet this ever-expanding market need. These loans offer fixed-rate terms of between 5-10 years (with up to 30-year terms for loans that have not been securitized). Sample terms include:

Terms include:

  • Size:  $5 million - $100 million (in practice, however, loan sizes are somewhat flexible)

  • Use:  Acquisitions or refinances 

  • Terms:  5-10 years (Up to 30 years if loan not purchased for securitization)

  • Amortization:  30 year maximum with I/O financing available

  • Maximum LTV/Minimum DSCR:  

  • 5-7 Year Loans:

    • Amortizing: 75%/1.35x

    • Partial Term Interest-Only: 75%/1.35x

    • Full Term Interest-Only: 65%/1.45x

  • 7 Year Loans:

    • Amortizing: 80%/1.30x

    • Partial Term Interest-Only: 80%/1.30x

    • Full Term Interest-Only: 70%/1.40x

  • 7+ Year Loans:

    • Amortizing: 80%/1.30x

    • Partial Term Interest-Only: 80%/1.30x

    • Full Term Interest-Only: 70%/1.40x

  • Recourse:  Non-recourse with standard carve-outs


Freddie Mac Student Housing Value-Add Loans

With so many college students in the U.S., the need for student housing is incredibly high, even with the large influx of student housing units being added to the market in recent years. While building a new student housing property might seem lucrative, it may be a better investment to simply retrofit an existing property to better meet the needs of today’s students. Fortunately, with the Freddie Mac Student Housing Value-Add Loan, investors can do just that. And, with leverage up to 85% permitted, these loans make it easier than ever.

Terms include:

  • Size:  Varies based on leverage and debt service  

  • Use:  Intended for purchases and refinances of eligible Student Housing properties requiring moderate upgrades of $10,000 to $25,000 per unit

  • Terms:  3 years with one 12-month extension (borrower's request), and another optional 12-month extension (based on Freddie Mac discretion) 

  • Interest:  Floating-rate interest only loan, interest-rate caps are not mandatory

  • Recourse:  Non-recourse with standard carve-outs

  • Leverage: Up to 85% LTV

  • DSCR: 1.20x minimum

  • Prepayment Penalty: 1% penalty for the entire term, no lockouts, and penalty is waived if loan is refinanced with Freddie Mac. 

  • Eligible Borrowers/Properties: 

    • Borrowers need to have expertise with similar properties; parties guaranteeing the loan need to have 150% of Freddie Mac’s general liquidity/net worth standards (general standards are typically 100% of the loan in net worth and 10% in liquidity (not including retirement accounts)

    • College/university needs to have an enrollment of 15,000 or more

    • In general, properties should be high-quality and should not need significant rehabilitation

    • Properties above a certain size are generally not eligible (250 unit/625 bed limit)

    • Badly performing/poorly managed properties and REO (real-estate owned) properties in receivership are eligible

    • Student housing properties need to be located no more than 2 miles off campus, and travel to campus should be easy

  • Additional Rehabilitation Requirements: 

    • Rehabilitation budget needs to be between $10,000 and $25,000/unit or between $4,000 to $10,000/bed

    • Between 25% and 50% of budget must be spent on interiors

    • Renovation needs to begin with 90 days of loan origination; it cannot last any longer than 33 months

  • Refinancing Test:  Not required

  • Assumability:  Loans are not assumable 


Freddie Mac Float-to-Fixed-Rate Loans (Two-Plus-Seven)

Freddie Mac Float-to-Fixed-Rate Loans allow borrowers to enjoy the low cost of variable rate financing for the first 24 months of their loan, while locking in a fixed-rate at closing that will protect them from later market fluctuations. While these loans don’t permit seniors housing, student housing, or manufactured housing communities, they do allow for the financing of most types of market-rate and affordable properties.

Terms include:

  • Size:  Varies, determined via fixed-rate

  • Terms:  9 years: 2 years variable-rate, I/O, 7 years fixed-rate, partially amortizing financing

  • Amortization:  Up to 30 years

  • Interest Rate:  

    • Variable-rate: 1-month LIBOR + 7-year floating pricing + 20 bps

    • Fixed rate: 7-year UST + 7-year fixed pricing + 20 bps

  • Maximum LTV/Minimum DSCR:  Varies, determined via fixed-rate

  • Prepayment Options:  Defeasance permitted after a 2-year lockout

  • Timing: Loans usually close with 60-75 days from initial application  


Freddie Mac Floating Rate Loans

Freddie Mac Floating Rate Loans offer exceptionally low interest rates, and are offered in 5, 7, and 10-year terms with interest-only options available. These non-recourse loans can be an excellent choice for borrowers looking for bridge financing to acquire a property, particularly if they wish to either sell or refinance the property within 5-10 years. In addition, these loans permit properties to have a certain degree of commercial space, so they can be generally be used to acquire certain mixed-use properties. Eligible property types include targeted affordable properties, manufactured housing communities, and seniors housing, but not housing cooperatives.

Terms include:

  • Size:  $5 million to $100 million (in practice, loan sizes are somewhat flexible)

  • Terms:  5, 7, and 10-year terms, partial and full-term I/O loans available. Interest-rate caps are generally mandated for loans with a 60%+ LTV, and are to be bought from a third-party provider.

  • Interest Rate:  Derived from 1-month LIBOR  

  • Amortization:  Up to 30 years

  • Eligible Properties: 

    • General multifamily housing

    • Seniors housing

    • Manufactured housing communities

    • Targeted Affordable Housing (TAH) properties (including certain LIHTC and Section 8 properites)

  • Eligible Borrowers: 

    • LLCs, LPs, tenancies in commons (TICs), and corporations permitted

    • TICs must have 10 or less tenants in common, and each must be a single purpose entitity (SPE)

    • For financing in excess of $5 million, borrowers need to be SPEs For financing less than $5 million, borrowers may be single asset entities (SAEs)

  • Recourse:  Non-recourse with standard carve-outs

  • Maximum LTV/Minimum DSCR:  

    • 5-7 Year Loans:

      • Amortizing: 75%/1.30x

      • Partial Term Interest-Only: 75%/1.30x

      • Full Term Interest-Only: 65%/1.40x

    • 7 Year Loans:

      • Amortizing: 80%/1.25x

      • Partial Term Interest-Only: 80%/1.25x

      • Full Term Interest-Only: 70%/1.35x

    • 7+ Year Loans:

      • Amortizing: 80%/1.25x

      • Partial Term Interest-Only: 80%/1.25x

      • Full Term Interest-Only: 70%1.35x\

  • Prepayment Options:  Various combinations of lockouts, 6-7 year prepayment penalties, and step-down prepayment penalties. All penalties waived for the final 90 days of the loan.  

  • Assumability:  Fully assumable with lender approval and a 1% loan assumption fee payable to Freddie Mac. Lender underwriting fee might also be required.

  • Refinancing Test: Required for I/O loans and amortizing loans LTV of more than 65% and a DSCR of less than 1.40x.

  • Closing Timeline:  Commitment usually received between 45 and 60 days after application. The speed of the appraisal and other third-party reports may influence the speed of closing.


Freddie Mac HUD Section 8 Loans

The HUD Section 8 program is the largest rental housing assistance program provided by the U.S. government, offering housing assistance to approximately 5 million low-income households across the United States. For investors and developers who currently own Section 8 properties, a Freddie Mac HUD Section 8 Loan could be an excellent way to finance them. This loan program provides 5-15 year terms, while allowing leverage up to 80% and a minimum DSCR of 1.20x.

Plus, Freddie Mac Section 8 loans provide additional benefits to properties also utilizing the Low Income Housing Tax Credit (LIHTC) program. Specifically, LIHTC properties are offered extended 10-30 year loan terms, leverage up to 90%, and DSCRs as low as 1.15x. However, despite these benefits, only borrowers with Section 8 experience qualify for this type of financing. In addition, these loans are only available from select Freddie Mac lenders.

Terms include:

  • Size:  Based on individual project

  • Terms:  5-year minimum, 15-year maximum for cash loans, 10-year minimum, 30-year maximum for tax-exempt financing 

  • Amortization:  30 years maximum (cash loans), 35 years maximum (tax-exempt financing)

  • Maximum LTV: 80%, 90% for properties with LIHTC

  • Minimum DSCR: 1.20x, 1.15x for properties with new LIHTC

  • Prepayment Options:  Defeasance, yield maintenance for properties with LIHTC

  • Subordinate Financing: Permitted on a case-by-case basis

  • Recourse: Non-recourse with standard carve-outs

  • Eligible Section 8 Subsidies: 

  • Project-based subsidies: Rental assistance tied to a specific property. Properties get cash payments determined by the number of tenants living in eligible units.

  • Tenant Based subsidies: Based on the number of qualifying occupants, this type of rental assistance to specific tenants, each which have vouchers. There are two types of vouchers:

    • Regular vouchers: Regular vouchers limit payments to HUD's fair market rent in the particular area where the property is located.

    • Enhanced vouchers: Enhanced vouchers are utilized in projects where borrowers/owners are or will be leaving the Section 8 program, in order to help tenants afford increases in monthly rent.


Freddie Mac Moderate Rehab Loans

If you own a conventional property, and you want to make between $25,000 and $60,000 in renovations/unit, a Freddie Mac Moderate Rehab Loan could be the perfect option. Freddie Mac Moderate Rehab Loans are one of the lowest cost types of rehabilitation financing on the market today, offering leverage up to 80% of the “as-is” value of the property.

Terms include:

  • Size:  Adjusted based on leverage and debt service

  • Terms:  Usually float-to-fixed-rate loan structure, with variations based on individual borrower needs; I/O loans offered during property rehab period.

  • Interest-Rate Cap: Required if the loan is not converted to fixed-rate. 

  • Amortization:  Adjusted based on individual borrower

  • Maximum LTV80% of as-is value

  • Minimum DSCR:  

    • 1.20x interest-only “as-is”

    • After improvements, should be at least 1.30x DSCR

  • Recourse:  Non-recourse with standard carve-outs

  • Rehab Timeline:  All rehabilitation work must be complete within 36 months. 

  • Prepayment Options:  2% penalty during rehab, other standard Freddie Mac prepay structures allowed after

  • Eligible Borrowers:  Should have reasonable net worth and significant experience in similar rehabilitations

  • Eligible Properties: Intended rehab amount should be between $25,000 and $60,000 in renovations/unit.

  • Periodic Draws: Monthly or quarterly draws permitted. For initial draw, servicer must provide certification to Freddie Mac. Other draws will also require certification. 5% of draws retained to limit risk and are released upon project completion.

  • Seller/Servicers:  Must be approved by Freddie Mac for conventional loans


Freddie Mac Supplemental Loans

Freddie Mac multifamily borrowers in need of additional funds shouldn’t need to turn to expensive mezzanine debt and preferred equity; and fortunately, with Freddie Mac Supplemental Loans, they don’t have to. This type of non-recourse financing starts at only $1 million, with leverage up to 80%. There are two main types of supplemental loans offered by Freddie Mac; Split Supplemental Loans, which are originated simultaneously with a borrower’s primary Freddie Mac mortgage, and Seasoned Supplemental Loans, which can only be issued after a mandatory 12-month waiting period after the primary loan has been originated.

As long as a borrower meets LTV/DSCR requirements, there is no set maximum of supplemental loans which they can take out. However, they generally need to wait at least 1 year between each loan.

Terms include:

  • Size:  $1 million+ minimum, maximum loan amount determined by leverage and debt service

  • Use:  Supplemental financing for current Freddie Mac Multifamily borrowers 

  • Terms:  Fixed and variable rate options allowed; generally needs to be conterminous with primary loan, may be able to exceed primary loan by 24 months.

  • Recourse:  Non-recourse with standard carve-outs

  • Maximum LTV/Minimum DSCR:  

    • 5-7 Year Loans:

      • Amortizing: 75%/1.30x

      • Partial Term Interest-Only: 75%/1.30x

      • Full Term Interest-Only: 65%/1.40x

    • 7 Year Loans:

      • Amortizing: 80%/1.25x

      • Partial Term Interest-Only: 80%/1.25x

      • Full Term Interest-Only: 70%/1.30x

    • 7+ Year Loans:

      • Amortizing: 80%/1.25x

      • Partial Term Interest-Only: 80%/1.25x

      • Full Term Interest-Only: 70%1.35x

  • Assumability:  Supplemental loans may be assumed by another borrower, however, a 1% fee and lender approval is required.

  • Prepayment:  Yield maintenance

  • Eligible Borrowers:  Borrowers must currently have a Freddie Mac multifamily loan and be current in their payments. Current loans need to have a minimum of 36 months remaining on their term.

  • Eligible Properties:  Conventional multifamily assets, manufactured housing communities, and student housing are all eligible under standard terms. Affordable properties and seniors housing are also eligible, but terms may vary.

  • Timing: Loans usually close in between 45 and 60 days, though this can vary significantly depending on individual deals.


Freddie Mac Manufactured Housing Community Loans

Freddie Mac Manufactured Housing Community Loans offer non-recourse financing with leverage of between 70-80% and terms of up to 10-years. This makes them one of the most attractive loan options on the market for investors interested in acquire or refinance a manufactured housing community. Plus, these loans have amortizations up to 30 years, boosting potential DSCRs and keeping monthly payments relatively low.

Terms include:

  • Size:  Loans start at $1 million  

  • Terms:  5, 7, and 10-year loan terms permitted (longer terms may be negotiated on a case-by-case basis) both fixed and adjustable-rate financing available, with a variety of I/O loan options available 

  • Amortization: Up to 30 years 

  • Recourse: Majority of loans are non-recourse with standard carve-outs

  • Maximum LTV/Minimum DSCR:  

  • 5-7 Year Loans:

    • Amortizing: 75%/1.30x

    • Partial Term Interest-Only: 75%/1.30x

    • Full Term Interest-Only: 65%/1.40x

  • 7 Year Loans:

    • Amortizing: 80%/1.25x

    • Partial Term Interest-Only: 80%/1.25x

    • Full Term Interest-Only: 70%/1.30x

  • 7+ Year Loans:

    • Amortizing: 80%/1.25x

    • Partial Term Interest-Only: 80%/1.25x

    • Full Term Interest-Only: 70%1.35x

  • Prepayment Options: Yield maintenance permitted before loan is securitized. After securitization, loans are subject to a 24-month lock-out. After this, defeasance is permitted, but, for a fee, borrowers can opt for a yield maintenance prepayment structure. Prepayment penalties are waived for the final 3 months of the loan term.

  • Eligible Properties:  

    • 5+ pad sites required.

    • 25% or less of manufactured homes may be rented out.

    • Homes must comply with safety standards set by HUD, and must follow rules set by the Federal Manufactured Home Construction and Safety Standards Act of 1974.

    • No purchase-option leases, RV resorts or broken condominiums allowed.

    • Private wells/septic systems are sometimes allowed.

  • Eligible Borrowers:  

    • Borrowers typically are required to have a minimum of 24 months experience in owning and operating similar communities, and generally should own at least one other similar MHC

    • LPs, tenancies in commons (TICs), and corporations permitted, REITs, GPs and some LLCs are permitted in certain circumstances.

    • TICs must have 10 or less tenants in common, and each must be a single purpose entity (SPE)

    • For financing in excess of $5 million, borrowers need to be SPEs For financing less than $5 million, borrowers may be single asset entities (SAEs)

  • Assumability:  Assumable w/ lender approval and 1% assumption fee payable to Freddie Mac. An additional $5,000 lender underwriting fee is also generally required.

  • Supplemental Loans:  Allowed 

  • Sellers/Servicers:  While all Freddie Mac lenders can technically offer these loans, seller/servicers with considerable expertise in manufactured housing community financing are generally preferred.

  • Timing:  Commitments generally issued within 45-60 days post-application; may vary based on due diligence, appraisals, and other third-party reports.


Freddie Mac Manufactured Housing Resident Owned Community Loans (MHROC Loans)

Freddie Mac Manufactured Housing Resident Owned Community Loans (MHROC Loans) fund manufactured housing communities that are currently transitioning from a rental community to a community where manufactured homes are owned by residents. It also permits seasoned refinances, which occur after the majority of a manufactured housing community is already resident-owned. Freddie Mac MHROC Loans are non-recourse, with leverage up to 70%, and offer flexible, fixed-rate terms between 5 and 30-years. This type of financing is surprisingly flexible, as it permits supplemental loans, as well as offering rate locks and a variety of prepayment options.

Terms include:

  • Size:  Loans start at $500,000 

  • Terms:  5-30 year terms (all loans are fixed-rate)

  • Use: The acquisition, conversion, or seasoned refinance of manufactured housing resident owned communities,

    • Acquisition/Conversions: Intended for manufactured housing community properties which are currently being converted from rentals to a resident-owned MHC.

    • Seasoned Refinances: This is a refinance on a resident-owned manufactured housing community, typically after the majority of the shares have already been sold.

  • Amortization: Up to 30 years 

  • Recourse:  Financing is generally non-recourse with standard carve-outs

  • Maximum LTV/Minimum DSCR:  

    • Market-Rate Rental:

      • Acquisition/Conversion: 70%/1.40x

      • Seasoned Refinance: 70%/1.40x

    • As Cooperative:

      • Acquisition/Conversion: N/A/1.15x

      • Seasoned Refinance: N/A/1.10x

  • Prepayment:  Until loan is securitized, borrowers may pay yield maintenance. After securitization, a 2-year lock-out period begins, after which borrowers may conduct defeasance. However, for an additional fee at closing, they can opt to pay yield maintenance. There are no prepayment penalties for the last 30 days of the loan.

  • Supplemental Loans:  Permitted  

  • Eligible Borrowers/Properties:  

    • Associations/cooperatives in which residents own shares, which permits them to occupy a specific pad site.

    • The association/cooperative must own all pads at rate lock, while resident shareholders need to own at least 90% of shares in the community.

    • Manufactured housing communities should be professionally managed. Seniors/retirement communities are allowed.

  • Sellers/Servicers:  All Freddie Mac approved originators/servicers are technically allowed to originate, but Freddie Mac prefers those with specific expertise in manufactured housing community financing.

  • Additional Restrictions and Information:

    • Mezzanine loans, preferred equity, seller financing, preferred equity, wraparound mortgages, broken condominiums, RV resorts, or purchase-option leases prohibited.

    • In certain situations, private wells and/or septic systems may be permitted.


Freddie Mac NOAH Preservation Loans

Specifically designed for non-profits engaged in improving America’s supply of low-income housing, NOAH Preservation Loans are intended to preserve “naturally occurring affordable housing” (NOAH) properties, i.e. properties where rent is naturally low, but is likely to be raised soon due to gentrification or other market conditions. Freddie Mac NOAH Loans help non-profits acquire these properties in order to keep rents affordable for current and future residents, and, to do so, permits leverages of up to 80%, and DSCRs low as 1.20x.

Terms include:

  • Size:  Adjusted based on leverage and debt service

  • Amortization: 30 years or less

  • Terms:  15 year maximum

  • Use:  Allows qualified non-profit groups to purchase Naturally Occurring Affordable Housing (NOAH) multifamily properties to keep rents low for current and future residents.

  • Maximum LTV/Minimum DSCR: 80%/1.25x (DSCR of 1.20x permitted in certain conditions)  

  • Eligible Properties:  Eligible NOAH properties (includes most type of apartment buildings_

  • Eligible Borrowers:  501(c)(3) nonprofit organizations with affordable housing preservation as a stated part of their mission and experience with successful property ownership. 

  • Recourse:  Loans may be recourse or non-recourse

  • Prepayment:  Defeasance or yield maintenance (varies based on individual deals)

  • Affordability:  A minimum of 50% of building units must have rental payments set at between 60%-120% of the AMI (area median income), as determined by the specific requirements for that market.

  • Equity Requirements: Nonprofit sponsor needs to:

    • Utilize Freddie Mac Impact Gap Financing, or

    • Have a mission-focused equity partner providing capital for the project, or

    • Put down all equity (soft debt allowed)


Freddie Mac Seniors Housing Loans

Freddie Mac Seniors Housing Loans are an ideal financing solution for senior healthcare properties, including assisted living, skilled nursing, and memory care facilities. These non-recourse, fully assumable loans provide terms of up to 30 years for fixed-rate financing, and terms up to 10 years for adjustable-rate loans. Plus, Freddie Mac Seniors Housing Loans offer leverage up to 75%, with DSCRs as low as 1.30x. In general, nothing on market can compete, with the exception of HUD 232 financing, which is generally much less flexible and can be significantly more difficult to qualify for.

Terms include:

  • Size:  Adjusted based on leverage and debt service, generally $5 million+

  • Use:  Purchase or refinancing of senior housing developments  

  • Term:  5-10 years (Up to 30 years for fixed-rate financing) 

  • Recourse:  Non-recourse with standard “bad boy” carve-outs

  • Amortization:  Up to 30 years, with I/O options 

  • Assumability:  Generally fully assumable with Freddie Mac approval and 1% fee

  • Maximum LTV/Minimum DSCR:  

    • Independent Living (IL): 

      • 5-7 Year Loans:

        • Amortizing: 75%/1.30x

        • Partial Term Interest-Only: 70%/1.30x

        • Full Term Interest-Only: 65%/1.40x

      • 7 Year Loans:

        • Amortizing: 75%/1.30x

        • Partial Term Interest-Only: 75%/1.30x

        • Full Term Interest-Only: 65%/1.40x

      • 7+ Year Loans:

        • Amortizing: 75%/1.30x

        • Partial Term Interest-Only: 75%/1.30x

        • Full Term Interest-Only: 65%/1.40x

    • Assisted Living (AL) (50%+ units):  

      • 5-7 Year Loans:

        • Amortizing: 70%/1.45x

        • Partial Term Interest-Only: 70%/1.45x

        • Full Term Interest-Only: 60%/1.55x

      • 7 Year Loans:

        • Amortizing: 75%/1.40x

        • Partial Term Interest-Only: 75%/1.40x

        • Full Term Interest-Only: 65%/1.50x

      • 7+ Year Loans:

        • Amortizing: 75%/1.40x

        • Partial Term Interest-Only: 75%/1.40x

        • Full Term Interest-Only: 65%/1.50x

    • Skilled Nursing (SN) (Cannot exceed 20% of net operating income):  

      • 5-7 Year Loans:

        • Amortizing: 70%/1.50x

        • Partial Term Interest-Only: 70%/1.50x

        • Full Term Interest-Only: 60%/1.65x

      • 7 Year Loans:

        • Amortizing: 75%/1.45x

        • Partial Term Interest-Only: 75%/1.45x

        • Full Term Interest-Only: 65%/1.55x

      • 7+ Year Loans:

        • Amortizing: 75%/1.45x

        • Partial Term Interest-Only: 75%/1.45x

        • Full Term Interest-Only: 65%/1.55x

Prepayment Penalty: Yield maintenance, defeasance, and other options are available. Just like other Freddie Mac multifamily loans, prepayment fees are waived for the final 90 days of the loan term. 

Refinancing Test: Waived for properties with LTVs of 55% or less, and DSCRs of between 1.45-1.60x (depending on property type). Test, however, is required for all I/O loans.

Eligible Borrowers: Corporations, LPs, LLCs, or tenancies in common (TICs). Generally must be a special purpose entity (SPE). Loans less than $5 million may alternately form a Single Asset Entity.

Timing:  Loans generally close 60-90 days after the pre-screening process begins. Financing for repeat borrowers may close in as little as 30 days.


Freddie Mac Value-Add Loans

Freddie Mac Value-Add Loans allow a borrower to finance the light rehabilitation of a multifamily property. These non-recourse loans are intended for investors/developers planning to make renovations of between $10,000 and $25,000 per unit, and are available for both property purchases and refinances. With 3-year, interest-only loan terms, they are often best for borrowers who wish to “fix and flip” a multifamily property, or who plan to refinance into longer-term debt when the initial 3-year loan term is up. In addition, Freddie Mac Value Add Loans allow leverage of up to 85% and DSCRs as low as 1.10x.

Terms include:

  • Size:  Varies based on leverage and debt service

  • Use:  Purchases and refinances 

  • Terms:  3 year term with with one 1-year extension, and a second 1-year extension (with approval from Freddie Mac) 

  • Interest Rates:  Variable-rate I/O loan

  • Interest-Rate Caps:  Not required 

  • Maximum LTV: Up to 85%

  • Minimum DSCR:  1.10x -1.15x (varies based on market factors) 

  • Recourse:  Non-recourse with standard carve-outs

  • Assumability:  Loans are not assumable 

  • Eligible Properties: 

    • Only conventional multifamily properties allowed (no manufactured housing communities, seniors housing, or student housing permitted)

    • Properties must be high-quality and should not need more than light renovations

    • Properties must have a maximum of 500 total units

    • REO properties and poorly performing properties are generally eligible

  • Eligible Borrowers:  Borrowers need to have experience with the rehabilitation of multifamily assets, and generally need 150% of the typical net worth/liquidity requirements.  

  • Additional Renovation Requirements: 

    • Rehab needs to begin within 90 days of loan origination, and needs to finish within 33 months

    • 50% of rehab budget should be spent on unit interiors

    • Planned upgrades need be between $10,000 and $25,000/unit

  • Refinancing Test:  Not required

  • Prepayment:  1% prepayment penalty for full loan term. Penalty is waived if loan is refinanced with Freddie Mac. 


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