Freddie Mac Small Apartment Loans - Linked Program

The Freddie Mac Small Balance Apartment Loan (SBL) program provides financing for non-contiguous properties through its Linked Property program.

$2,000,000 minimum loan size.

• Minimum of 5 units for each property and a 10 unit minimum for total units.
• Properties built within 10 years of each other with similar or comparable construction types.
• Comparable interior improvements and unit configuration. Rents for each unit type should be comparable.

No individual property is more than 3 miles walking distance from at least one of the other subject properties.

All properties must be owned in or by a single asset entity. Properties with different ownership structures are ineligible.

Should be within 5% for each of the subject properties.

Income and expense statements and rent rolls must be provided on both an individual property basis and on a consolidated basis.

Non-contiguous single unit residential properties.

As of November 1, 2022, non-contiguous 2-4 unit residential properties are now eligible.

1-4 unit residential properties with more than 5 units and are contiguous may be eligible under the core Freddie Mac SBL Multifamily Loan Program.

Linked Program is only available in Top and Standard Markets. Properties may be eligible on an exception basis with strong mitigates in Small and Very Small Markets.

There are five Regions (Western, South Central, North Central, Southeast and Northeast) under the Freddie Mac SBL Program. Interest rates vary by Region and Market Tier.

• 5-year.
• 7-year.
• 10-year.

• 5-year fixed + 15-year ARM.
• 7-year fixed + 13-year ARM.
• 10-year fixed + 10-year ARM.

• Index: 6-month SOFR.
• Margin: Call.
• Interest rate floor equal to start rate.
• Lifetime cap set at 5% above the start rate.
• 1% periodic rate adjustment every 6 months.

+15bps above standard SBL pricing.

30 years.

1.25-1.45 depending on Market Tier. DSCR is 5bps higher for Linked Properties than DSCR requirements under the SBL Program.

No underwriting floor rate.

70%-75%. LTV is 5% lower for Linked Properties than LTV requirements under the SBL Program.

85%-90%.

• 1 year for 5-year fixed term.
• 2 year for 7-year fixed term.
• 3 year for 10-year fixed term.
• Full fixed term interest only available (up to 10-years) for loans with a DSCR > 1.35 and LTV < 65% in Top and Standard Markets. Higher DSCR required in Small and Very Small Markets.

Actual/360.

• Yield maintenance or declining prepay options.
• 5-year fixed term: 5-4-3-2-1. Can be reduced with rate increase.
• 7-year fixed term: 5-5-4-4-3-2-1. Can be reduced with rate increase.
• 10-year fixed term: 5-5-4-4-3-3-2-2-1-1. Can be reduced with rate increase.
• 1% prepay during ARM term - can be waived if selling the property or refinance with a Freddie Mac.

Non-recourse subject to standard carve-outs.

Yes, subject to lender approval and a 1% assumption fee.

Real estate property tax required, but can be deferred for loans less than 65% LTV. Insurance escrow deferred. Replacement reserves deferred.

Not required.

Not permitted.

At application.

• 680 minimum credit score.
• Collective net worth of key principals must exceed loan amount.
• Minimum liquidity of nine months debt service.
• Local ownership no prior multifamily experience required.
• Non-local ownership requires one-year comparable multifamily ownership experience. Exceptions available in Top, Standard and Small Markets if non-local with strong mitigates.
• Foreign nationals with 2x program minimum net worth and liquidity and has US multifamily experience.

• Single asset entity required.
• Trusts and corporations only eligible on an exception basis.
• Tenants in Common (TIC) eligible with no more than 5 co-tenants and each co-tenant is a single asset entity.

• Any member or limited partner with more than a 25% interest in the borrower.
• All managers of the borrowing entity.
• All general partners of the borrower.