Effective May 11, 2022, Freddie Mac has made the following changes to its Small Balance Multifamily Loan (SBL) program.

Interest Only Payments – Freddie Mac has reduced the addition to the base interest rate from 4 bps to 1 bps for each year of interest only. This is a positive move for Freddie Mac borrowers as it significantly reduces the all-in interest rate for interest only loans. For qualified properties Freddie Mac provides up to 10-years of interest only payments. Prior to May 11, 2022, this would have added 40 bps to the base interest rate. Now, it only adds 10 bps to the base interest rate. On a $5M loan over the course of 10 years this would save a borrower $150,000 in interest expense.

Rent Affordability Discount – Freddie Mac has increased the interest rate discount for properties with rents that are considered affordable to greater than 30% of the tenants at less than 60% of the average median income (AMI) for the county. For qualified properties this effectively reduces Freddie Mac’s SBL base level interest rate from 40 bps to 60 bps. This is significant in a rising interest rate environment as it reduces a borrower’s interest rate more than .5% below market interest rates. To determine if a property qualifies for this discount, CREFCOA can run the calculation with a current rent roll.

Contact CREFCOA at 844-359-6413, extension #1, to learn more. Or, request a custom quote for your apartment or multifamily property today.