Freddie Mac HUD Section 8 Loans

Loans for Section 8 Housing Assistance Program Project-based Contract or Tenant-based Voucher Properties Insured by Freddie Mac

Section 8 properties can be challenging to own and operate but have the capacity to be incredibly financially rewarding. Therefore, if you're an investor or developer who's ready to expand your portfolio of affordable properties, a Freddie Mac HUD Section 8 loan might be the ideal financing option to get you there.

Freddie Mac's HUD Section 8 financing program offers 10- to 30-year loan terms for Low-Income Housing Tax Credit (LIHTC) properties and 5- to 15-year loan terms for non-LIHTC properties. Additionally, these loans have maximum loan-to-value (LTV) ratio allowances of up to 90% and minimum debt service coverage ratio (DSCR) requirements of as low as 1.15x (for LIHTC properties), and up to 80% maximum LTV allowances and as low as 1.20x DSCR (for non-LIHTC properties.)

Freddie Mac HUD Section 8 Financing Highlights

  • Properties with Section 8 tenant-based vouchers are eligible for cash loans for conventional sellers
  • TAH sellers can obtain credit enhancement for bonds and funding for tax-exempt loans (TELs)
  • Borrowers must have demonstrated experience in owning and managing similar Section 8 properties
  • Eligible mixed-use properties are supported

Sample Freddie Mac Terms for HUD Section 8 Loans

Size: Varies

Terms: 5-year minimum and 15-year maximum for cash loans; 10-year minimum and 30-year maximum for tax-exempt financing

Amortization: Up to 30 years for cash loans; up to 35 years for tax-exempt financing

MaximumLTV: 80% for non-LIHTC properties; 90% for LIHTC properties


  • Properties with Section 8 Housing Assistance Program (HAP) contracts in above-average markets, with physical vacancies of 5% or less: 1.20x
  • Properties with new LIHTC credits: 1.15x
  • Some excess rent may be underwritten for above-market, long-term LIHTC contracts

Prepayment Options: Defeasance for non-LIHTC properties; yield maintenance for LIHTC properties

Eligible Borrowers: Need previous Section 8 ownership/management experience

Eligible Properties: High-rise properties, midrise properties, and garden apartment properties; must have a Section 8 project-based contract or voucher


  • Cash loans with Section 8 project-based contracts: TAH and Freddie Mac Multifamily Approved Conventional Sellers
  • Cash loans with Section 8 tenant-based vouchers: Freddie Mac Multifamily Approved Conventional Sellers
  • Tax-exempt financing: TAH sellers only

Section 8 Subsidies:

  • Eligible Section 8 subsidies include:
    • Project-based subsidies: Rental assistance tied to a specific property Properties get cash payments determined by the number of tenants living in eligible units
    • Tenant-Based subsidies: Rental assistance tied to a specific tenant, not a specific property; properties get cash payments determined by the number of qualifying occupants, such as those with vouchers, which include:
      • Regular vouchers: Most vouchers are regular vouchers, which limit payments to HUD's fair market rent in a particular area where the property is located
      • Enhanced vouchers: Enhanced Section 8 vouchers are provided to tenants living in properties that used to receive project-based subsidies, including properties where the owner has either determined to leave the Section 8 program or has prepaid their government-insured mortgage; for tenants living in these properties, enhanced vouchers help them pay for rent increases, which means these vouchers are typically based on the actual rent of the property

Subordinate Financing: Permitted with additional requirements and analysis


  • Very competitive interest rates
  • Loans are nonrecourse
  • Certain mixed-use properties are eligible


  • Typically requires third-party reports, including appraisal, Phase I Environmental Assessment, and physical condition assessment
  • Requires application fees, commitment fees, and other fees