Apartment Loan Overview
Freddie Mac adjustable rate apartment loans are ideal for multifamily mortgage borrowers who want to take advantage of lower short-term rates with prepayment flexibility
• Offers a streamlined, yet still flexible, financing solution at Freddie Mac’s lowest price
• Borrowers can choose from several options to suit their loan characteristics and needs, including a variety of interest rate cap coverage and prepayment provision options
Freddie Mac Adjustable Rate Apartment Loans Terms
- Borrower may generally be a limited partnership, corporation, limited liability company, or a tenancy-in-common (TIC) with 10 or fewer tenants in common.
- General partnerships, limited liability partnerships, REITs and certain trusts may also be acceptable in limited circumstances, subject to additional requirements.
- Borrower must generally be a Single Purpose Entity (SPE) (see Section 6.13 of the Loan Agreement for basic SPE requirements); however, on loans less than $5 million, upon Borrower’s request, a Borrower other than a TIC may be a Single Asset Entity (SAE) instead of an SPE.
- If the borrower is structured as a Tenancy In Common (TIC), each Tenant in Common must be an SPE.
You can choose from four prepayment provisions when structuring Freddie Mac standard, capped, or uncapped floating- rate loans. Each option offers no prepayment premium for the last 90 days of the loan term.
|Prepayment Premium||Year 1||Year 2||Year 3||Year 4||Year 5||Year 6||Year 7||Year 8|
|Option 4 (only for 10-yr
capped floating-rate loan)
Loan-to-Value (LTV) Ratios and Amortizing2 Debt Coverage Ratios (DCRs)
|FLOATING-RATE BASE CONVENTIONAL MAXIMUM LTV AND MINIMUM DCR3||(For specific product adjustments, refer to individual term sheet)|
|Amortizing||Partial-Term Interest-Only4||Full-Term Interest-Only|
|Acquisitions and Refinances|
|= 5-Year and < 7-Year Term||75% / 1.30x||75% / 1.30x||65% / 1.40x|
|7-Year Term||80% / 1.25x||80% / 1.25x||70% / 1.35x|
|> 7-Year Term4||80% / 1.25x||80% / 1.25x||70% / 1.35x|
1 Other options are available for loans that are not intended to be securitized. Borrowers should contact a Freddie Mac Multifamily Seller/Servicer for more information; Freddie Mac Sellers should contact their Freddie Mac representative.
2 The DCR calculated for the partial-term interest-only and full-term interest-only period uses an amortizing payment at the comparable fixed note rate.
3 Adjustments may be made depending on the property, product, and/or market.
4 For partial term interest-only loans, there must be a minimum amortization period of 5 years for loans with terms greater than 5 years. Acquisition loans with 5-year terms may have up to 1 year of partial-term interest-only. For terms of 10 years or more, no more than 5 years of interest-only is permitted.