Freddie Mac Student Housing Loan Guidelines

Eligible Borrowers -

• 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, real estate investment trusts (REITs), and certain trusts may have limited eligibility, and are subject to additional requirements
• Must generally be a Single Purpose Entity (SPE). On loans less than $5 million,a borrower other than a TIC may be a Single Asset Entity instead of an SPE, if requested
• If the borrower is structured as a TIC, each tenant in common must be an SPE

Eligible Property Types -

• Purpose-built student housing properties with a minimum of one bathroom for every two bedrooms and each apartment is required to have a separate full kitchen
• Stabilized garden, mid-rise, and high-rise apartment properties with a student tenant population greater than 50%
• Supporting college/university has 8,000 or more students or alternatively, student housing properties located within close proximity to multiple schools that have a combined student body of 8,000 students or more (to be considered at lender’s discretion)
• Property is located no more than two miles from college/university or on a public transportation route

Terms - 5-10 years (up to 30 years for fixed-rate loans if the loan is not purchased for securitization)

Amount - Generally, $5 million to $100 million (larger and smaller loans at lender’s discretion)

Maximum Amortization - 30 years

Financing Options - Acquisition or refinance

Ground Lease - May be permitted for land owned by a college or university with prior approval

Lease Parameters -

• Individual tenant lease by the apartment, bedroom, or by the bed
• Rent under a master lease allowable with prior approval

Lease Terms - Between 9 and 12-months (12-month is preferred)

Lease Guaranty - Parental guaranty is preferred

Recourse Requirements - Non-recourse with standard “bad boy” carve-outs

Supplemental Loans - Available subject to requirements in the Loan Agreement and current Freddie Mac program and product requirements at the time of the supplemental loan request

Exclusions -

• Residence halls
• Multiple occupancy rooms with a shared common bathroom
• Centralized food service areas
• Dining halls

Tax and Insurance Escrow - Generally required

Replacement Reserve Deposit - Generally a minimum of $150 per bedroom or $300 per unit

Application Fee - Greater of $2,000 or 0.1% of loan amount

Early Rate-Lock Options - Early rate-lock and Index Lock options available in most cases

Refinance Test - No Refinance Test is necessary if the loan has an amortizing debt coverage ratio (DSCR) of 1.40x or higher and an LTV of 60% or less

In this article:

1. A highly competitive option for student housing finance through Freddie Mac
2. Freddie Mac Student Housing Loan Guidelines
3. Get Financing