Does the Freddie Mac SBL Program Offer Cash-Out Refinances?

Program update, July 2026

What changed. Freddie Mac retired the Small Balance Loan program on April 15, 2026 and folded small-balance lending into its conventional platform. New loans are originated as Conventional Small: $2 million to $10 million, up to 80% LTV, 1.25x minimum debt coverage, properties of 50 units or fewer. The practical effect is that Freddie no longer has a small-balance product below $2 million. The guidance on this page describes SBL as it operated before that change, and remains useful for understanding loans already in place.

What you can still do. Small-balance agency financing did not go away. Fannie Mae's Small Mortgage Loan program is still open, lends up to $9 million on five or more units, and is often the better execution on smaller deals. Below the agency minimums, or where the property or the timeline does not fit an agency box, the desk also places bank, CMBS, bridge, life company, and HUD/FHA debt. See Freddie Mac apartment loans for current agency terms, or tell us about the deal and we will size it across every execution that fits.

Cash Out Refinancing and Freddie Mac Small Balance Loans

The Freddie Mac Optigo Small Balance Loan Program offers cash-out refinances, though they are typically approved on a case-by-case basis. Overall, borrowers are more likely to be approved for cash out if they present a low risk for Freddie Mac. The most eligible borrowers for cash-out refinancing deals include those who are financing higher-quality properties in Top and Standard Markets, with DSCRs somewhat above the minimum requirements (1.20x - 1.25x for those markets).

What are the requirements for a Freddie Mac SBL Program cash-out refinance?

In addition to the property requirement, servicers and sellers must also meet a specific set of guidelines. These include collateral, undergoing a rigorous assessment, B-piece purchase, loss sharing, repurchasing of delinquent SBLs and origination of at least $50 million per quarter.

Unlike many types of multifamily financing, the Freddie Mac SBL program offers loans as low as $750,000. However, these ‘smaller’ Small Balance Loans come with additional requirements, due to the additional risk and expense they carry. Additional requirements include:

Loans must be in a Top Market or Standard Market
Eligible borrowers include:
Previous Freddie Mac Multifamily borrowers
Borrowers taking out multiple loans simultaneously
Borrowers who will are likely to engage Freddie Mac for 2+ additional loans within the next 12 months
Borrowers with significant multifamily experience in the area (2+ years local multifamily experience and 2+ multifamily properties owned)
Loans that were initially approved for $1 million+ but were later constrained by property NOI or other factors
Properties must underwrite a vacancy of at least 5% and an expense ratio of at least 30%

Additionally:

10-15 bps will be added loans in Top Markets, while 15-20 bps will be added to loans in Standard Markets
Cash-out refinances for these loans are typically subject to stricter leverage requirements (LTV/DSCR)
Seller/servicers may not market Small Balance Loans less than $1 million
Freddie Mac generally requires 3 additional business days for commitments and inspections

What are the benefits of a Freddie Mac SBL Program cash-out refinance?

The Benefits of a Freddie Mac SBL Program Cash-Out Refinance include:

Flexible loan sizes, starting at just $750,000 and going up to $7.5 million
Low interest rates, starting from just 4.51%
High leverage, up to 80% LTV
Generous DSCR minimums, as low as 1.20x
30-year amortizations, keeping payments low for borrowers
Partial and full-term interest-only loans offered
Multiple fixed rate term options (with up to 10-year terms) and hybrid ARM options (with 20-year terms)
Soft step-down prepayment penalties allowed
60-120 day rate commitments offered
Loans are fully assumable with 1% fee and Freddie Mac approval
Financing is non-recourse (with individual exceptions for certain loans)

What are the risks associated with a Freddie Mac SBL Program cash-out refinance?

The risks associated with a Freddie Mac SBL Program cash-out refinance include:

The borrower must present a low risk for Freddie Mac in order to be approved for cash-out refinancing.
The borrower must finance higher-quality properties in Top and Standard Markets, with DSCRs somewhat above the minimum requirements (1.20x - 1.25x for those markets).
The borrower must pay an application fee of $4,500 for Top Markets and $8,500 for Standard Markets.
Leverage and DSCR requirements become significantly stricter in small and very small markets (1.30x and 1.40x DSCR, respectively, and between 70-75% LTV).
Certain limits on subordinate financing.
Replacement reserves of up to $300/unit are often required.

How long does it take to get approved for a Freddie Mac SBL Program cash-out refinance?

The approval process for a Freddie Mac SBL Program cash-out refinance typically takes 45 to 60 days after application. Borrowers are more likely to be approved for cash out if they present a low risk for Freddie Mac, such as financing higher-quality properties in Top and Standard Markets, with DSCRs somewhat above the minimum requirements (1.20x - 1.25x for those markets).

For more information, please refer to the following sources:

What documents are required for a Freddie Mac SBL Program cash-out refinance?

The borrower must provide financial reports that are aggregated for a Freddie Mac SBL Program cash-out refinance. This means that any reports must treat the individual buildings as one property, rather than a number of separate ones. Financial reporting must also be in line with Loan. This requirement also applies to the appraisal and the property condition assessment. The structures must all be considered one property.

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