February 12

Freddie Mac SBL Agency Loan Programs for Apartments – IFP EP#121

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Freddie Mac offers Small Balance Loans that are designed specifically for smaller multifamily properties. They set the interest rates, which are highly competitive. As with most other real estate assets, the debt is secured by the property. Therefore, no personal guarantees are required. You can typically borrow up to 80 percent of the property’s value. If you choose, you can make interest-only payments for part or all of the loan term.

Sample Freddie Mac Terms for Apartment Loans:

· Size: From $1,000,000 and up
· Terms: Floating and fixed-rate options with 3, 5, 7, 10 + year terms
· Amortization: Up to 30 years
· Maximum LTV: 80% (subject to sub-market and debt service constraints)
· Minimum DSCR: From 1.25 for market-rate properties
· Recourse: Non-recourse with standard “bad boy” carve-outs
· Rate Locks: Early rate-lock options available for varying durations, typically ranging from 60 to 120 days until Freddie Mac’s purchase; Index Lock and Fast Track Early Rate-Lock options also available.
· Prepayment: Yield maintenance until securitized followed by 2-year lockout; defeasance thereafter. No prepayment premium for the final 90 days.



Advantages:

· Highly competitive pricing.
· Early rate lock.
· Up to 80% LTV.
· Partial-term and full-term interest-only available.
· Supplemental loans are available.
· Non-recourse.


Tags

creative financing, financing, investor loans, real estate, real estate investing


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