What is the Required DSCR for the Freddie Mac SBL Program?
DSCR Requirements for Freddie Mac Small Balance Loans
DSCR, or debt service coverage ratio, is one of the most important metrics that lenders use to determine a borrower’s eligibility for multifamily and commercial financing. Minimum DSCR requirements for the Freddie Mac Optigo Small Balance Loan program start at just 1.20x, but can go up to 1.50x for certain borrowers. In general, DSCR requirements are larger for smaller markets, as well as for property refinances. The specific DSCR requirements for Small Balance Loans are detailed below:
- Top Markets: 1.20x DSCR for hybrid ARM and fixed-rate loans, 1.35x DSCR for full-term interest-only financing
- Standard Markets: 1.25x DSCR for hybrid ARM and fixed-rate loans, 1.40x DSCR for full-term interest-only financing
- Small Markets: 1.30x DSCR for hybrid ARM and fixed-rate loans, 1.40x for full-term interest-only financing
- Very Small Markets: 1.40x DSCR for hybrid ARM and fixed-rate loans, 1.50x for full-term interest-only financing
What is the maximum loan amount for the Freddie Mac SBL Program?
The maximum loan amount for the Freddie Mac SBL Program is $7.5 million. Additional requirements apply for loans between $6 million and $7.5 million, including that they must be in Top & Standard Markets, have no more than 100 units, and require a minimum DSCR of 1.25x. Source
What is the minimum DSCR requirement for the Freddie Mac SBL Program?
The minimum DSCR requirement for the Freddie Mac SBL Program is 1.20x for hybrid ARM and fixed-rate loans in top markets, and 1.50x for full-term interest-only financing in very small markets.
For more information, please see the following sources:
What is the maximum loan-to-value ratio for the Freddie Mac SBL Program?
The maximum loan-to-value ratio for the Freddie Mac SBL Program is 80% for purchases and refinances in Top and Standard Markets. For Small or Very Small Markets, the maximum loan-to-value ratio is 75% for purchases and 70% for refinances. For full-term interest-only financing, the maximum loan-to-value ratio is 65% for Standard Markets and 60% for Small or Very Small Markets.
Source 1 Source 2 Source 3What is the minimum debt service coverage ratio for the Freddie Mac SBL Program?
The minimum debt service coverage ratio (DSCR) for the Freddie Mac Small Balance Loan (SBL) Program starts at 1.20x for hybrid ARM and fixed-rate loans in top markets, and can go up to 1.50x for full-term interest-only financing in very small markets.
In top markets, the DSCR requirement is 1.20x for hybrid ARM and fixed-rate loans, and 1.35x for full-term interest-only financing. In standard markets, the DSCR requirement is 1.25x for hybrid ARM and fixed-rate loans, and 1.40x for full-term interest-only financing. In small markets, the DSCR requirement is 1.30x for hybrid ARM and fixed-rate loans, and 1.40x for full-term interest-only financing. In very small markets, the DSCR requirement is 1.40x for hybrid ARM and fixed-rate loans, and 1.50x for full-term interest-only financing.
Sources: https://apartment.loans/posts/dscr, https://apartment.loans/posts/what-is-the-required-dscr-for-the-freddie-mac-sbl-program, https://www.freddiemac.com/multifamily/product/pdf/small_balance_loan.pdf
What is the maximum debt service coverage ratio for the Freddie Mac SBL Program?
The maximum debt service coverage ratio for the Freddie Mac SBL Program depends on the market size and loan type. For amortizing loans in Top Markets, the maximum DSCR is 1.20x. For full-term interest-only loans in Smaller Markets, the maximum DSCR is 1.50x. For more information, please see the following sources: