Freddie Mac Green Advantage’s New Terms Improve Pricing and Widen Eligibility

A new update to Freddie Mac Green Advantage®, an attractive loan program in a rising interest rate environment, has added new incentives to going green to more multifamily borrowers than ever before. Freddie Mac recently announced a 15 bps pricing benefit to borrowers on top of any affordability benefits currently offered. At the same time, all previous affordability requirements were lifted, opening to door to more investors seeking to improve the sustainability of our communities.

Green Advantage Rewards Multifamily Borrowers

Launched in 2016, the Freddie Mac Green Advantage suite of multifamily financing options provides incentives to borrowers who pledge to improve their properties to save energy or water. Part of the Agency’s Duty to Serve initiative, the Green Advantage program aims to advance the sustainability of multifamily communities throughout the U.S.

“While the Green Advantage program had been somewhat more challenging of a proposition over the last several years, recently published changes to its terms have once again made it a financially intelligent choice,” said Jean-Laurent Pouliot, Managing Director, Senior Product Officer at Arbor. “But the Green Advantage program is more than a pricing play. The demonstrated utility savings it delivers benefit all: the borrowers who realize short- and long-term expense savings, the tenants who pay less in utility costs, and the environment for ourselves and for our kids. It’s a win-win-win.”

Going Green More Attractive Than Ever

Green Advantage, a program that aligns well with other Environmental, Social, and Governance (ESG) initiatives, is now more attractive than ever.

Loan and Transaction Savings

The updated Terms for Green Advantage make borrowers eligible for a new pricing benefit of up to 15 bps in addition to any affordability benefits currently offered for Conventional or Targeted Affordable Housing loans.

More Types of Loans Now Qualify

Arbor’s Green Advantage suite is now available to more borrowers and can be used with a wider range of Freddie Mac loans. The program is no longer limited to 10-year fixed Conventional and Targeted Affordable Housing loans. Borrowers who choose 7- and 10-year fixed-rate or floating-rate executions are now eligible to receive the same level of loan and transaction savings.

Program Eligibility Expanded

With these new terms, Green Advantage is becoming a more inclusive program. All of the previously stipulated affordability requirements to qualify for Green Up and Green Plus were removed, allowing more types of multifamily investments to benefit from this program.

How Green Advantage Works

Freddie Mac borrowers who commit to reducing energy and water consumption in their properties by at least 30% may be eligible for better pricing and more funding. In addition to loan and transaction savings, the average borrower saves $191 per unit per year through reduced utility costs, which adds up to an average of $48,900 per loan per year. Freddie Mac may also underwrite expected utility savings from green improvements subject to certain conditions.

Two Great Green Programs from Freddie Mac

When applying for Green Advantage, borrowers may choose between Green Up® or Green Plus®, both of which promise to deliver short- and long-term savings.

Green Assessment®/Green Up

Borrowers interested in Green Up may be eligible for a reimbursement of up to $4,000 to cover the cost of a Green Assessment. This straightforward property analysis shows how energy or water can be saved through property improvements. Borrowers who are able to save 30% in energy or water usage with a minimum of 15% from energy receive better pricing.

Green Assessment Plus®/Green Up Plus

Freddie Mac borrowers who choose the Green Up Plus path receive a Green Assessment Plus, a highly detailed property analysis based on an ASHRAE level 2 energy audit, which is also reimbursable up to $4,000. Borrowers who commit to making improvements based on this assessment and can save 30% in energy or water usage with a minimum of 15% from energy will receive better pricing.

Request a No-Cost Green Quote

Green Advantage’s updated terms give borrowers a new reason to give a second look at a well-established Freddie Mac multifamily loan program. Ask for a green quote today. You can be reimbursed up to $4,000 for the cost of your green report once Freddie Mac funds your loan.

Arbor, a leading Freddie Mac Optigo® Seller/Servicer and Top Small Balance Loan Lender, specializes in providing nationwide multifamily financing solutions. We provide customized and flexible loan solutions for a wide range of Freddie Mac multifamily loan products.

Interested in the multifamily real estate investment market? Contact Arbor today to learn about our array of multifamily, single-family rental, and affordable housing financing options or view our multifamily articles and research reports.