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Apartment Loans Secrets
4 min read
by Content Team

Freddie Mac Small Balance Loan Interest Rates

In this article:
  1. Interest Rate Information for the Freddie Mac Small Balance Loan Program
  2. Northeast
  3. Southeast
  4. North Central
  5. South Central
  6. Western
  7. Related Questions
  8. Get Financing
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Interest Rate Information for the Freddie Mac Small Balance Loan Program

Freddie Mac Optigo Small Balance Loans have some of the most competitive interest rates on the market, especially considering that they allow investors to take out loans as small as $750,000. Fortunately, the SBL program offers a variety of both fixed and floating-rate mortgage options. This can be beneficial, as different investors may have different investing timelines, and thus different needs. For instance, an investor who wishes to sell the property within 3-4 years may opt for a lower-cost, floating-rate loan, while an investor who wants to keep the property for 10+ years may want to take out a fixed-rate loan in order to reduce their risk exposure.

Rates vary between Top, Standard, Small, and Very Small Markets. In addition, pricing is further broken down by region, as Freddie Mac has divided the U.S. into 5 distinct regions for the purposes of SBL pricing. Right now (July 2019), interest rates for Freddie Mac Small Balance Loans range from 4.08% to 5.16%. We have broken down rates by region and market size below:

Northeast

Delaware, Pennsylvania, New Jersey, New York, Rhode Island, Connecticut, Massachusetts, Vermont, New Hampshire, Maine

| Market Tiers | 5-Year Hybrid | 7-Year Hybrid | 10-Year Hybrid | 5-Year Fixed | 7-Year Fixed | 10-Year Fixed |
| --- | --- | --- | --- | --- | --- | --- |
| Top Markets | 4.23% | 4.37% | 4.57% | 4.23% | 4.42% | 4.57% |
| Standard Markets | 4.51% | 4.52% | 4.61% | 4.66% | 4.62% | 4.66% |
| Small Markets | 4.90% | 4.76% | 4.95% | 4.90% | 4.86% | 5.00% |
| Very Small | 5.11% | 4.95% | 5.11% | 5.11% | 5.05% | 5.16% |

Southeast

Arkansas, Louisiana, Mississippi, Tennessee, Alabama, Georgia, Florida, South Carolina, North Carolina, Virginia, West Virginia, Maryland

| Market Tiers | 5-Year Hybrid | 7-Year Hybrid | 10-Year Hybrid | 5-Year Fixed | 7-Year Fixed | 10-Year Fixed |
| --- | --- | --- | --- | --- | --- | --- |
| Top Markets | 4.18% | 4.42% | 4.47% | 4.23% | 4.47% | 4.47% |
| Standard Markets | 4.51% | 4.57% | 4.61% | 4.56% | 4.67% | 4.66% |
| Small Markets | 4.85% | 4.71% | 4.70% | 4.85% | 4.81% | 4.75% |
| Very Small | 5.06% | 4.90% | 5.06% | 5.06% | 5.00% | 5.11% |

North Central

North Dakota, South Dakota, Nebraska, Kansas, Missouri, Iowa, Minnesota, Wisconsin, Michigan, Illinois, Missouri, Indiana, Ohio, Kentucky

| Market Tiers | 5-Year Hybrid | 7-Year Hybrid | 10-Year Hybrid | 5-Year Fixed | 7-Year Fixed | 10-Year Fixed |
| --- | --- | --- | --- | --- | --- | --- |
| Top Markets | 4.18% | 4.42% | 4.57% | 4.28% | 4.47% | 4.57% |
| Standard Markets | 4.51% | 4.57% | 4.66% | 4.56% | 4.67% | 4.71% |
| Small Markets | 4.85% | 4.71% | 4.70% | 4.85% | 4.81% | 4.75% |
| Very Small | 5.06% | 4.90% | 5.06% | 5.06% | 5.00% | 5.06% |

South Central

Montana, Wyoming, Colorado, New Mexico, Texas, Oklahoma

| Market Tiers | 5-Year Hybrid | 7-Year Hybrid | 10-Year Hybrid | 5-Year Fixed | 7-Year Fixed | 10-Year Fixed |
| --- | --- | --- | --- | --- | --- | --- |
| Top Markets | 4.18% | 4.42% | 4.57% | 4.28% | 4.47% | 4.57% |
| Standard Markets | 4.51% | 4.57% | 4.66% | 4.56% | 4.67% | 4.71% |
| Small Markets | 4.85% | 4.71% | 4.70% | 4.85% | 4.81% | 4.75% |
| Very Small | 5.06% | 4.90% | 5.06% | 5.06% | 5.00% | 5.06% |

Western

Washington, Oregon, Idaho, California, Nevada, Utah, Arizona, Alaska

| Market Tiers | 5-Year Hybrid | 7-Year Hybrid | 10-Year Hybrid | 5-Year Fixed | 7-Year Fixed | 10-Year Fixed |
| --- | --- | --- | --- | --- | --- | --- |
| Top Markets | 4.08% | 4.27% | 4.42% | 4.23% | 4.57% | 4.47% |
| Standard Markets | 4.56% | 4.52% | 4.66% | 4.71% | 4.67% | 4.76% |
| Small Markets | 4.85% | 4.71% | 4.9% | 4.9% | 4.86% | 4.95% |
| Very Small | 5.06% | 4.90% | 5.06% | 5.11% | 5.05% | 5.11% |

Related Questions

What are the current Freddie Mac Small Balance Loan interest rates?

The current Freddie Mac Small Balance Loan interest rates vary between Top, Standard, Small, and Very Small Markets. In addition, pricing is further broken down by region, as Freddie Mac has divided the U.S. into 5 distinct regions for the purposes of SBL pricing. Right now (July 2019), interest rates for Freddie Mac Small Balance Loans range from 4.08% to 5.16%. We have broken down rates by region and market size below:

Western:

Market Tiers 5-Year Hybrid 7-Year Hybrid 10-Year Hybrid 5-Year Fixed 7-Year Fixed 10-Year Fixed
Top Markets 4.08% 4.27% 4.42% 4.23% 4.57% 4.47%
Standard Markets 4.56% 4.52% 4.66% 4.71% 4.67% 4.76%
Small Markets 4.85% 4.71% 4.9% 4.9% 4.86% 4.95%
Very Small 5.06% 4.90% 5.06% 5.11% 5.05% 5.11%

Northeast:

What are the advantages of a Freddie Mac Small Balance Loan?

The advantages of a Freddie Mac Small Balance Loan include:

  • Up to 80% LTV allowance
  • Streamlined application process
  • Loans are non-recourse
  • Interest-only options
  • 30-year amortizations
  • Variety of hybrid ARM and fixed-rate options available
  • Loans are assumable with approval and 1% fee
  • 60-120 day rate locks typically available
  • Flexible loan sizes, starting at just $750,000 and going up to $7.5 million
  • Low interest rates, starting from just 4.51%
  • Generous DSCR minimums, as low as 1.20x
  • Partial and full-term interest-only loans offered
  • Cash-out refinancing offered for eligible borrowers
  • 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
  • Financing is non-recourse (with individual exceptions for certain loans)

What are the eligibility requirements for a Freddie Mac Small Balance Loan?

The eligibility requirements for a Freddie Mac Small Balance Loan vary depending on the size of the loan. For loans under $1 million, eligible borrowers include previous Freddie Mac Multifamily borrowers, borrowers taking out multiple loans simultaneously, borrowers who 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), and loans that were initially approved for $1 million+ but were later constrained by property NOI or other factors. Additionally, properties must underwrite a vacancy of at least 5% and an expense ratio of at least 30%.

For loans between $6 million and $7.5 million, they are generally only permitted in Top & Standard Markets, can have no more than 100 units, and will require a borrower to order additional third-party reports, including a survey report and a zoning report. Additionally, loans of more than $6 million also require a minimum DSCR of 1.25x, and require that borrowers form a Single Asset Entity (SAE).

In terms of credit, borrowers for the Optigo Small Balance Loan program will usually need to have a FICO credit score of at least 650. Capacity, which is defined by DSCR, varies between 1.20x (for amortizing loans in Top Markets) to 1.50x (for full-term interest-only loans in Small Markets). Since Small Balance Loans are non-recourse, the property itself is generally considered to be sufficient collateral for the loan.

What are the maximum loan amounts for a Freddie Mac Small Balance Loan?

The maximum loan amount for a Freddie Mac Small Balance Loan is $7.5 million. Source 1 and Source 2.

What are the fees associated with a Freddie Mac Small Balance Loan?

The fees associated with a Freddie Mac Small Balance Loan include a $7,000 application fee and a Freddie Mac processing fee of 0.1% of the loan amount. Additionally, third-party reports, including an Appraisal, Phase I Environmental Assessment, and Engineering Report, are typically required. Replacement reserves of between $200 and $300 per unit may also be required. Subordinate debt is not permitted. Source

In this article:
  1. Interest Rate Information for the Freddie Mac Small Balance Loan Program
  2. Northeast
  3. Southeast
  4. North Central
  5. South Central
  6. Western
  7. Related Questions
  8. Get Financing
Tags
  • Blog
  • freddie-mac-sbl
  • freddie-small-balance-loans
  • frequently-asked-questions

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Market Tiers 5-Year Hybrid 7-Year Hybrid 10-Year Hybrid 5-Year Fixed 7-Year Fixed 10-Year Fixed
Top Markets 4.23% 4.37% 4.57% 4.23% 4.42% 4.57%
Standard Markets 4.51% 4.52% 4.61% 4.66% 4.62% 4.66%
Small Markets 4.90% 4.76% 4.95% 4.90% 4.86% 5.00%
Very Small 5.11% 4.95%