Market Trends

Government & Policy


December 15, 2022

New experience & property eligibility requirements open Freddie Mac’s Door

New experience & property eligibility requirements open Freddie Mac’s Door

Effective December 15, Freddie Mac will begin accepting ownership of two- to four-unit properties – a.k.a. duplexes, triplexes, or quadplexes – as relevant experience for all loans in its Optigo® Small Balance Loans (SBL) program. Previously, Freddie Mac defined multifamily experience as controlling ownership of a property with at least five units or more and excluded two- to four-unit properties.  

By expanding their borrower experience definition, Freddie’s SBL program increases opportunities for investors who focus on small multifamily housing to grow their portfolios by accessing financing outside of banks.    

What qualifies as experience?  

Here’s what you should know. Freddie Mac expanded their definition of multifamily experience to include borrowers who have a portfolio of two- to four-unit properties that meet the following criteria:

  • The borrower must own at least 10 units total
  • The borrower must have owned each property for at least two years
  • The borrower must have a controlling interest in all 10 units
  • The 10 units do not need to be contiguous or located in the same county

The new requirements provide investors access to agency debt when beginning to invest in larger properties such as those with 5-50 units, rather than continuing to rely on a bank. Non-recourse financing provided by Freddie Mac allows borrowers to only put up the property as collateral, unlike banks which regularly require personal assets in addition to the property as collateral. This allows borrowers the ability to scale their portfolios faster as they do not have contingent liabilities on their balance sheet and free up access to capital.

Freddie SBL expands financing on two- to four-unit properties under its Link Loans Program

Freddie Mac has financed duplex, triplex, and quadplex properties in the past under its Link Loans program. Under the old rules, however, all the units had to be contiguous. Few investors acquire properties right next to each of their other properties and, unfortunately, were unable to take advantage of Link Loans.

Additionally, Freddie Mac is opening its Link Loans program to all of its designated market tiers – Top, Standard, Small, and Very Small. (These are roughly analogous to commercial real estate's traditional primary, secondary, and tertiary market tiers.)

With these additional tweaks to their programs, Freddie Mac is now accepting a bundle of non-contiguous properties – with at least 10 total units as long as the following conditions are met:

  • Minimum loan amount of $2 million
  • Buildings are within 3 miles of any other building included in the loan (exception up to 5 miles may be considered)
  • Buildings are in the same county
  • No owner-occupied units
  • Non-contiguous single-unit buildings are not allowed
  • All the properties must use common property management and provide common financials after closing

If you want to take advantage of these changes, Walker & Dunlop can help. We’ll identify whether your properties meet the requirements. And if you’re interested in the Link Loans program, we have the experience and track record financing portfolios of small multifamily assets.  We want to be your partner to help you grow your portfolio and maximize your returns throughout your investment lifecycle. Contact us.


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