Freddie Mac Small Loan Program:

Loan Amount:  $1 million to $6 million in all markets (Between $6 million and $7.5 million for properties with 75 units or less in Top and Standard SBL Markets).  Freddie Mac defines each market by county and city.  As a result there are hundreds of classes.  It is best to call for precise market designation information.

  • Loan Purpose: Acquisition or refinance
  • Loan Terms:  a) 20-year hybrid ARM with initial 5-, 7-, or 10-year fixed-rate period
  1. b) 5-, 7-, or 10-year fixed-rate loan.

Amortization: Up to 30 years

Interest Only and Partial-term interest-only; full-term interest-only may be available (generally low loan to value ratios required).

Prepayments Declining schedules and yield maintenance available for all loan types – see charts below.

Eligible Borrowers/Borrowing Entities:

  • Up to $6 million – Individuals who are US citizens; limited partnerships; limited liability companies;
  • Single Asset Entities (SAE) (are acceptable but not required to be an SAE or SPE); Special Purpose Entities (SPE); tenancy in common with up to five unrelated members; and Trusts (irrevocable trusts and revocable trusts with an individual guarantor)
  • Between $6 million and $7.5 million – Single Asset Entities.

Recourse Non-recourse with standard carve-out provisions required.

Subordinate debt: Not Permitted

Net Worth and Liquidity:

  • Net worth: Equal to or greater than the loan amount.
  • Liquidity: No less than 9 months of principal and interest.

Eligible Properties:

  • Multifamily housing with five1residential units or more, including:
    • Cooperatives in the five boroughs of New York City and Long Island.
    • Properties with tax abatements.
    • Seniors housing with no resident services.
    • Properties with space for certain commercial (non-residential) uses.
    • Properties with tenant-based housing vouchers.
    • LIHTC properties with LURAs that are in either the final 24 months of the initial compliance period or the extended use period (investor must have exited).
    • Properties with local rent subsidies for 10% or fewer units where the subsidy is not contingent on the owner’s initial or ongoing certification of tenant eligibility.
    • Properties with certain regulatory agreements that impose income and/or rent restrictions, provided all related funds have been disbursed.


Ineligible Properties:

  • Seniors housing with resident services
  • Student housing (greater than 50% concentration)
  • Military housing (greater than 50% concentration)
  • Properties with project-based housing assistance payment contracts (including project-based Section 8 HAP contracts)
  • LIHTC properties with LURAs in compliance years 1 through 12
  • Historic Tax Credit (HTC) properties with a master lease structure
  • Tax exempt bonds Interest Reduction Payments (IRPs)

Occupancy:      Property must be stabilized at:

  1. 90% physical occupancy for the trailing 3-month average prior to underwriting or
  2. 85% physical occupancy for the trailing 3-month average prior to Underwriting if the subject property has any of the following characteristics:
    1. Property is recently built or renovated in a Top Market.
    2. Property is <30 units
  • Acquisition with all of the following:
    • Sophisticated acquiring sponsorship and  management relative to current ownership.
    • Appraised occupancy and/or rents materially higher than subject’s current operations.
    • Subject property has not experienced volatile historical occupancy swings.
    • No history of serious crime at the subject property.


Replacement Reserves:                Underwritten replacement reserves will be determined based on a rating established in the streamlined PNA (Property Needs Assessment). The rating will estimate the level of improvements needed over the life of the loan. The rating scale will be generally range between $200 to $300 per unit per year.  You should assume the Replacement Reserves will be used in underwriting the loan and determining the DSCR (Debt Service Coverage Ratio), normally Freddie Mac does not actually collect for this Reserve.


  • Real estate tax escrow deferred for deals with an LTV ratio of 65% or less
  • Insurance escrow deferred
  • Replacement reserve escrow deferred

Rate-Lock 60- to 120-day rate-lock period available.

Fixed-Rate/Hybrid ARM LTV Ratios and Amortizing DCRs: LTV and DCR requirements vary based on the market tier in which the property resides:

Full Term Interest-Only Adjustments: Full Term IO or Full Term IO during Fixed-Rate Period of Hybrid ARM.

Maximum available Partial IO Period for Small and Very Small SBL Markets is limited to:

  • 0 years on 5-year term
  • 1 year for a 7-year term
  • 2 years for a 10-year term/20-year hybrid

Prepayment Provisions:

Notes to  prepayment penalties: Hybrid ARM consists of an initial fixed-rate period followed by a floating-rate period is LIBOR +325 margin for 5-year hybrid period and LIBOR +275 margin for the 7- and 10-year hybrid periods. Every six months, the floating rate may increase or decrease by 1%, never be less than a floor of the initial fixed interest rate and never be greater than a maximum