Freddie Mac Small Apartment Loans - Program Guidelines

$1,000,000 - $7,500,000. With Freddie Mac approval, loans between $6 million and $7.5 million are available in Top and Standard Markets for properties with 100 units or less, or 100+ units with exception.

5+ unit multifamily. No restricted markets; however, eligibility may vary for sub markets considered as being higher risk. Non-contiguous properties (Freddie Mac SBL Linked program) are acceptable if they are being operated as one and each property meets the minimum LTV, DSCR and occupancy requirements. Residential commercial mixed-use properties are eligible if gross rents and gross rentable sq ft are less than 25% of total gross - up to 50% on an exception basis.

Properties with a HAP contract or LURA are eligible on a deal-by-deal basis. Section 8 voucher acceptable. Properties with a specific tenant concentration (e.g. students, military) greater than 25%. Tenant concentration greater than 25% but less than 50% eligible on an exception basis.

There are four Market Tiers under the Freddie Mac SBL Program. Every county in the country is designated as a Top, Standard, Small or Very Small Market. In general, counties in larger cities are designated as Top or Standard Markets while counties in smaller cities are designated as Small or Very Small Markets. Further, Tier designation is based on the size of the rental population, determined by the Census Bureau, and not necessarily by population.

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 + 5-year ARM.
• 7-year fixed + 3-year ARM.
• 10-year fixed + 10-year ARM.

• Index: 30-day Average SOFR.
• Margin: 2.75%-3.25%.
• Interest rate floor equal to start rate.
• Lifetime cap set at 5% above the start rate.
• 1% periodic rate adjustment every 6 months.

30 years.

1.20-1.40 depending on Market Tier.

No underwriting floor rate.

75%-80% depending on Market Tier.

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. Freddie Mac will hold the interest rate at no cost to the borrower for 35 business days from the date an application is signed. The lender complete the underwriting process and upload the loan into the Freddie Mac system by the 35th business day for the rate to be honored. 

• 680 minimum credit score.
• Collective net worth of key principals must exceed loan amount.
• Minimum liquidity of nine months debt service.
• Experience: A minimum of three (3) MF properties, with at least one for a minimum of the preceding two years or at least one multifamily property for the five preceding years. Freddie Mac will considers exceptions to the experience requirement 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.