Freddie Mac Impact Gap Financing

Additional Financing for the Acquisition of Naturally Occurring Affordable Properties Insured by Freddie Mac

Freddie Mac NOAH Preservation Loans are one of the best ways for nonprofits to acquire Naturally Occurring Affordable Housing (NOAH) properties, however, they don't always provide 100% of the financing that nonprofits need, especially for properties looking to undergo moderate renovations. Savvy investors looking to acquire additional funds for moderate rehabilitation of their property have begun pairing their NOAH Preservation Loans with Freddie Mac Impact Gap Financing at origination, which allows combined LTCs of up to 97% and DSCRs as low as 1.05x. By combining the private funds of Impact Investors with Freddie Mac's reliable infrastructure, Impact Gap Financing allows nonprofits greater financial flexibility to acquire and improve the affordable properties that many Americans rely on.

2021 Sample Freddie Mac Terms For Impact Gap Financing

Size: Varies based on LTV and DSCR requirements.

Use: Financing for the acquisition or refinance of stabilized affordable multifamily properties with 4% Low-Income Housing Tax Credits (LIHTCs) with at least 7 years remaining in the LIHTC compliance period.

Terms: Must mature after Freddie Mac NOAH Preservation Loan

Amortization: Based on Exit Requirement (property must achieve 80% combined LTV by the end of the loan term)

Maximum LTC: Combined maximum loan-to-cost of 97% (subject to payment structure and investor approval)

Minimum DSCR: 1.05x combined DSCR (also subject to payment structure and investor approval)

Eligible Properties: Garden, mid-rise, or high-rise multifamily NOAH properties

Eligible Borrowers: 501(c)(3) nonprofit organizations with affordable housing preservation as a stated part of their mission and experience with successful property ownership.

Payment Structure:

Paid from 75% of surplus cash in the following order:

  1. Interest
  2. Principal payments (not to exceed half of the remaining surplus cash after interest payment)


Borrower agrees to guaranty:

  • 100% interest debt service
  • 10% top loss of outstanding UPB at default required until the combined LTV is 85%

Prepayment Penalty: 5-year lockout, no prepayment penalty after

Affordability Requirements: At least 50% of units need to have affordable rents at 60%, 80%, 100%, or 120% of the area median income (AMI) based on the market at the time of origination


  • Moderate rehabilitation permitted (subject to investor approval)


  • Application fees, commitment fees, and other fees required