Seniors Housing Building

Freddie Mac Single-Family Rental (SFR) Pilot Program


Seeing the need for a product that can provide a financing option for single family rental home portfolios, Freddie Mac is testing out a new loan product called the Single-Family Rental Pilot Program. Since nearly 40% of renters lease single-family residences (i.e. structures with 1-4 units), Freddie wanted to provide a source of financing for owners of affordable single family rental homes that have exceeded the threshold of individual home loan allowances.


Loan Features/Characteristics
RecourseNon-recourse, except standard “bad boy” carve-outs
Prepayment Penalty Yield Maintenance or Step-Down
Loan Servicer Minimum of 0.25%, based on loan size
Application Fee 0.10% of loan amount
Reserves Taxes, insurance, and HOA
Capital Reserves Required
Due Diligence All 3rd party due diligence reports must be from Freddie’s approved vendor list.
Property Requirements
Property TypeSFRs (1-4 units) with permanent C/Os; (no MFH, condos, or co-ops)
Affordability 75% of SFRs must have affordable rents or are at 80% or below of AMI; waivers considered for mission-based or nonprofit strategies. Loans where only 51%+ of SFRs are affordable at 80% AMI or below, will be considered on an exemption basis.
Location Nationwide, but each MSA in a loan portfolio must have at 5+ homes
Loan Amount $5,000,000 minimum
Financials Operating Statement and Rent Roll required quarterly
Management 3rd party manager required (or company affiliated with Borrower with contract in place); replacement manager needs pre-approval from Lender.
Valuation Recent appraisals (within 6 months) must account for a minimum of 30% of the SFRs, with at least 15 appraisals. Valuations for the remaining homes are determined at Freddie Mac’s discretion.
Collateral All properties will be cross-collateralized and 100% of Borrower interest in the holding SPE will also be pledged.
Release Standard release provisions, including 115% payment and applicable prepayment premiums.
Borrower Requirements
StructureSingle Purpose Entity (SPE) that owns at least 50 SFR homes
Experience At least 5 years experience of owning and managing required
Underwriting Requirements
Term Length5, 7, or 10 years
Max LTV/LTC 70% (5 yr), 75% (7-10 yr) OR 80% (including rehabilitation costs)
Max Amortization 30 years
Min DSCR 1.30x (5-7 yr), 1.25x (10 yr)
Interest Rate Fixed