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Freddie Mac Tax-Exempt Loans

Investors looking to finance the acquisition, renovation, and refinancing of properties with 4% Low-Income Housing Tax Credits (LIHTC) credits with at least 7 years remaining in the LIHTC compliance period need look no further than the Freddie Mac Tax-Exempt Loan

In this article:
  1. Loans for the Acquisition or Refinancing of Affordable Multifamily Properties Insured by Freddie Mac
  2. 2021 Sample Freddie Mac Terms For Tax-Exempt Loans
  3. Get Financing
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Loans for the Acquisition or Refinancing of Affordable Multifamily Properties Insured by Freddie Mac

Financing the acquisition, renovation, and refinancing of properties with 4% Low-Income Housing Tax Credits (LIHTC) credits with at least 7 years remaining in the LIHTC compliance period is made much more attractive when investors choose a Freddie Mac Tax-Exempt Loan. With up to 30-year terms for fixed-rate loans, up to 10-year terms for variable-rate loans, and amortizations of up to 30 years, these loans can help borrowers save time and money when compared to traditional bond credit enhancements. Additionally, these loans offer maximum LTV allowances of up to 90% of an asset's market value with DSCRs as low as 1.15x for fixed-rate financing, and LTVs of up to 85% with DSCRs as low as 1.20x for floating-rate loans. Eligible mixed-use properties and permit subordinate financing are both supported under the program, making it an incredibly flexible tool for affordable property developers and investors.

2021 Sample Freddie Mac Terms For Tax-Exempt Loans

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 (LIHTC) with at least 7 years remaining in the LIHTC compliance period.

Terms:

Fixed-rate, floating-rate, and fixed-to-floating rate options, the minimum loan term is typically 7 years. Maximum terms include:

  • Fixed-rate loans: Up to 30 years
  • Floating-rate loans: Up to 10 years
  • Construction loans: Up to 36-months
  • Interest Rate:

    • Fixed-rate loans: Priced on a spread to 10-year Treasuries
    • Floating-rate loans: Based on 30-day SIFMA or 1-month LIBOR index
    • Amortization: Up to 35 years

      Maximum LTV:

      • Fixed-rate loans: 85% of adjusted value or 90% of market value
      • Floating-rate loans: 80% of adjusted value or 85% of market value with interest rate hedge
      • Minimum DSCR: 1.15x for fixed-rate, 1.20 for floating-rate, with interest rate hedge

        Prepayment Penalty: Minimum 10 years prepayment protection, then typically yield maintenance

        Subordinate Loans: Permitted, supplemental financing not available

        Timing: Loans typically take between 75 and 90 days to close, with some lenders closing in as little as 30 days

        Assumability: Loans are assumable with lender approval and a 1% fee

        Advantages:

        • Avoids the risk and hassle of bond issuing
        • Interest-only loan options
        • Eligible mixed-use properties supported
        • Immediately funding and forwards
        • Subordinate financing allowed
        • Fixed, floating, and float-to-fixed rate options
        • Freddie Mac GAP financing may be available
        • Rate locks available after commitment (early rate locks may also be available)
        • Disadvantages:

          • Appraisal, Phase I Environmental Report, Physical Needs Assessment, Zoning, and Moisture Management reports are required; a Seismic Report may be required for properties in Seismic Zones 3 and 4
          • Application fees, commitment fees, and other fees required
          • Replacement reserves required
          • No supplemental loans allowed
          • 2% rate lock fee typically required (refunded after property reaches stabilization)
          • Freddie Mac fee of $2,000 or 0.1% of the loan amount (whichever is larger) also typically required
        In this article:
        1. Loans for the Acquisition or Refinancing of Affordable Multifamily Properties Insured by Freddie Mac
        2. 2021 Sample Freddie Mac Terms For Tax-Exempt Loans
        3. Get Financing

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This website is owned by a company that offers business advice, information and other services related to multifamily, commercial real estate, and business financing. We have no affiliation with any government agency and are not a lender. We are a technology company that uses software and experience to bring lenders and borrowers together. By using this website, you agree to our use of cookies, our Terms of Use and our Privacy Policy. We use cookies to provide you with a great experience and to help our website run effectively.

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