Freddie Mac Multifamily: Five Types of Attractive Loan Options for 2023
Freddie Mac multifamily loans provide customized, innovative multifamily financing solutions for use in the purchasing and refinancing of properties with rentable housing units. From Small Balance Loans to Floating-Rate, commercial real estate borrowers can benefit from excellent terms and conditions. Among a wide range of Freddie Mac options available through Arbor, these five loan programs have key advantages worth considering.
1. Small Balance Loan
Arbor’s Freddie Mac Small Balance Loan program is designed for smaller multifamily properties and streamlines the entire loan process. Ranging from $1 million to $7.5 million, these types of Freddie Mac multifamily loans have highly competitive interest rates, provide the ability to borrow up to 80% of the property’s value, and offer the option to make interest-only payments for part of or the entire term of the loan.
Fixed loan terms of five, seven, or 10 years are offered. Eligible properties must have at least five residential units and can include properties with tax abatements and those with space for certain commercial (non-residential) uses. Our small loan product is non-recourse, meaning investors do not have to personally guarantee the loan.
Freddie Mac Fixed-Rate loans can be used to finance standard multifamily properties, student housing, seniors housing, cooperative housing developments, and targeted affordable housing properties, including Section 8 housing. Fixed-Rate loans are ideal for borrowers looking for stable payment plans, the ability to quickly build equity, and the option to make lower payments.
Arbor provides competitive, tiered pricing for the acquisition or refinancing of multifamily projects nationwide, including recently completed projects. Our Fixed-Rate loans are a minimum of $1 million for a term of five to 10 years, or up to 30 years for loans not purchased for securitization, for single-purpose entity multifamily properties.
Arbor’s Floating-Rate loan program is ideal for multifamily borrowers who want to take advantage of lower short-term rates with prepayment flexibility. This loan can often be used as a bridge loan, particularly for investors who plan to sell properties or secure permanent financing soon. Floating-Rate loans are available for many property types including standard multifamily housing, manufactured housing communities, seniors housing, and targeted affordable housing properties, but they are not available for cooperative housing properties.
Our product generally offers loans of $5 million to $100 million for five, seven, and 10-year terms. Eligible borrowers include limited partnerships, tenancies in common (TICs), corporations, or limited liability companies. These are non-recourse loans for both purchasing and financing multifamily properties with low, competitive rates and eligibility for certain mixed-use properties.
4. Early Rate Lock
Early Rate Lock (ERL) loans allow borrowers to lock the interest rate for a fixed-rate mortgage or the spread for a floating-rate mortgage, establish the mortgage amount, and set other key provisions of a proposed mortgage early in the approval process, usually within two to five days of the preliminary review. This Freddie Mac multifamily loan option eliminates interest rate risk early in the mortgage approval process and provides peace of mind for borrowers concerned about market volatility.
Arbor’s ERL program offers significant savings when interest rates or spreads are rising. ERL loans also let borrowers modify some parts of the transaction after rate lock at full underwriting. For example, the loan amount may be increased by up to 5.0% if positive net operating income (NOI) growth is demonstrated.
5. Manufactured Housing Community
Generally more affordable than other property types, manufactured housing communities are ideal for new investors with limited budgets. With flexible financing, competitive pricing, certainty, and fast execution, Manufactured Housing Community (MHC) loans provide financing for affordable housing for underserved populations, particularly in rural and non-metro areas across the country, where MHCs are an important, and sometimes only, source of affordable housing.
MHC loans start at $1 million and have terms of five, seven, and 10 years. They have no limits on age or family size, offer competitive interest rates, and are non-recourse.
Your Freddie Mac Multifamily Financing Partner
At Arbor, relationships are the foundation of our business, and we’re committed to providing first-class service. We’re not just another Freddie Mac multifamily lender. Our team will work together with you to customize the right loan solution for your needs.
Contact us today to learn how Arbor can help you achieve your investment goals.
Interested in the multifamily real estate investment market? Contact Arbor today to learn about our array of multifamily and single-family rental financing options and view our other market research and multifamily posts in our research section.