Freddie Mac Small Balance Program
Published 12-19-2018

Freddie Mac Small Balance Program

The Small Balance Program is for the acquisition or refinance of small balance loans providing liquidity, stability, and certainty of execution to the affordable rental housing market nationwide.

Key Benefits of the Freddie Mac Small Balance Program are as follows.

Financing of small balance loans using hybrid ARM or fixed-rate mortgage products, offering partial-term and full-term interest-only, A Streamlined processes during pricing, underwriting, closing and funding as well as Competitive pricing and Streamlined loan documents

Property types eligible are as follows:

Conventional multifamily housing with five residential units or more, including conventional housing with tax abatements and Section 8 vouchers.

Loan amounts range from $1-5MMMax LTV is 80%Term length ranges from 5-10 years.The terms are fixed that either balloon or roll over to a 20 year hybridAmortization goes up to 30 yearsThe prepayment penalty is yield maintenance, 5% declining, or 3% decliningSmall Balance loans are Non-recourseThe borrower Can rate lock up to 120 days in advance of closingAdditional loan features are as follows: The borrower can choose to have cash out, , small balance loans are assumable, replacement reserves and insurance escrow is waived, tax escrow is waived for LTVs at 65% or lower, credit score is a minimum of 650 or better, last but not least, the borrower’s net worth needs to be equal to the loan amount and their liquidity needs to be equal to 9 months of debt service payments.

For more information on Freddie Mac loans please visit our Freddie Mac Loans page.

About the Author

Leanne is a JD/MBA and works as a Managing Director for Commercial Loan Direct, specializing in large balance transactions, portfolio loans, and complex financing structures. When not negotiating the best deals for her clients, you can find Leanne in the yoga studio or snowboarding up in the Rockies.