Quick guide to Freddie Mac multifamily financing for investors

Freddie Mac remains one of the largest providers of mortgage financing in the United States. Not just for homeowners, Freddie Mac also offers enticing loan options for multifamily clients.

With the tagline “We Make Home Possible,” Freddie Mac puts its money where its mouth is, supporting $65B in multifamily loan origination and 553K rental units financed in 2024 alone. Of those, 93 percent of the eligible rental units funded were affordable to families with low-to-moderate incomes earning less than 120 percent of area median income (AMI). As demand for rental housing soars across the nation, Freddie Mac loans give multifamily clients a unique opportunity to capitalize on this trend while enjoying low interest rates, extended amortization periods, and non-recourse options.

Here’s why you should consider taking advantage of Freddie Mac and its stability and predictability in an ever-changing market.

Understanding Freddie Mac

The Federal Home Loan Mortgage Corporation, or Freddie Mac, is a government-sponsored enterprise (GSE) for multifamily properties and single-family homes. Freddie Mac was chartered by Congress in 1970 to support the U.S. housing finance system and help ensure a reliable and affordable supply of mortgage funds across the country. This helped to expand homeownership to more Americans at a time when interest rates were sky-high and mortgage credit was in short supply.
By purchasing mortgages from lenders, Freddie Mac provides liquidity, stability, and affordability into the market, enabling lenders to issue more loans to borrowers at affordable interest rates. This also fosters innovation in mortgage products.
Freddie Mac remains a critical partner and investor in the single-family and multifamily housing sector today.

A Word about Optigo®

Optigo® is the name of Freddie Mac’s Multifamily lender network and suite of loan offerings. Introduced in 2019, Freddie Mac Multifamily’s Optigo network is a select group of Freddie Mac-approved lenders (known as Seller/Servicers). Optigo lenders and Freddie Mac work together to provide flexible financing solutions to clients and support the financing of rental housing. Freddie Mac Multifamily’s Optigo offerings include a full range of innovative loan products for the acquisition, refinance, and moderate rehabilitation of multifamily properties.

Types of Freddie Mac loans for borrowers

Freddie Mac offers several options for multifamily loans, including the following:

Conventional multifamily loans

Conventional loans cover a wide range of use cases for multifamily developments. Loan amounts typically range from $7.5 million to $100 million, but smaller and greater amounts can be considered. Loans are available as fixed-rate, floating-rate, and float-to-fixed rate.

Eligibility:‍

• Property must be standard multifamily housing.
• Borrowers must be an LLC, corporation, limited partnership, or tenancy in common (TIC) with 10 or fewer tenants in common.
• The Borrower must be a Single-Purpose Entity (SPE) for loan amounts greater than $7.5 million; A Single-Asset Entity (SAE) is acceptable for smaller loans.
• See additional requirements

Targeted affordable housing (TAH)

TAH loans are designed for properties that serve low and very low-income tenants. These loans offer flexible terms tailored to affordable housing needs, including long-term fixed rates and various subsidy layering options.

Eligibility:

• Properties must meet specific affordability criteria (see separate term sheets here for more details).
• Borrowers must be an LLC, corporation, limited partnership, or TIC with 10 or fewer TICs, with experience in managing affordable housing preferred.
• The Borrower must be an SPE.
• ‍See additional requirements

Student housing loans

Freddie Mac provides specialized loans for student housing properties, recognizing their unique operational and leasing structures. These loans are tailored with terms that reflect the seasonal nature of student rentals.

Eligibility:

• Borrowers must be an LLC, corporation, limited partnership, or a TIC with 10 or fewer tenants in common.
• General partnerships, limited liability partnerships, real estate investment trusts (REITs), and certain trusts may also be acceptable in limited circumstances, subject to additional requirements.
• The borrower must generally be an SPE; however, on loans less than $5 million, upon the borrower’s request, a borrower other than a TIC may be an SAE instead of an SPE.
• Purpose-built student housing properties must have a separate full kitchen and bath.
• Stabilized garden, mid-rise, and high-rise apartment properties that are greater than 50 percent occupied by student tenants
• Focused on colleges/universities with increasing enrollment trends
• The property is located less than 2 miles from the college/university or on a public transportation route.
• See additional requirements

Manufactured housing communities (MHC)

MHC loans provide financing for communities with manufactured homes. Freddie Mac offers favorable terms to promote affordable housing within this sector.‍

Eligibility:

• ‍‍Existing, stabilized, high-quality, and professionally managed manufactured housing communities (MHCs), with or without age restrictions, excluding Seniors Housing properties.
• Sponsor should have two or more years of experience in operating MHCs and should own at least one other MHC property.
• Borrowers may be an LLC, corporation, limited partnership, or TIC with 10 or fewer TICs. General partnerships, limited liability partnerships, REITs, and certain trusts may also be acceptable, subject to additional requirements.
• The Borrower must be an SPE. On loans less than $5 million, a borrower other than a TIC may be an SAE instead.
• See additional requirements.

Seniors Housing

Seniors housing loans provide funding earmarked for assisted living facilities, independent living, memory care, and continuing care rental properties. Funds can be used to acquire or refinance existing properties designated as senior communities. Loan terms range from 5-10 years, but can be up to 30 years with a fixed interest rate.

Eligibility:‍

• Experienced owner of comparable senior facilities
• Can be an SAE, SPE, limited partnership, LLC, general partnership, REIT, or corporation, depending on the loan amount
• Property types can include independent living properties, assisted living properties, memory care properties, properties with a limited amount of skilled nursing, and any combination of the above.
• See additional requirements

Small Balance loan (SBL)

Freddie Mac’s SBLs provide funding ranging from $1 million to $7.5 million for properties with at least five apartment units. These loans are known for offering competitive terms through a cost-effective loan process. SBLs offer hybrid Adjusted-Rate Mortgages (ARM) and fixed-rate loan options. These loans also provide the added benefit of the rate being held at the time of application.

Eligibility:

• ‍‍Loan amounts $1M-$7.5M
• Single property with five or more units, which can include a 2–4-unit portfolio with a combined 10 or more units
• Acquisition or refinance
• See additional requirements

Additional Customization Options with Freddie Mac

In addition to its loan offerings, clients can access several customization options through the Freddie Mac financing program.

• Lock Options: Lock in rates with standard delivery, early-rate lock, and Index Lock, each of which helps preserve interest rates during critical times of the application process or loan term. Once a deal goes under application, Freddie Mac agrees to hold your quoted gross spread for 60 days. Note: These lock options are not applicable for SBL products, where the rate is held at application.
• Tenant Advancement Commitment: Get structured financing when you preserve rents via voluntary rent restrictions and provide tenant services at properties for the life of the loan.
• Green Advantage®: May qualify for better rates when prioritizing energy and water conservation.
• Workforce Housing Preservation: Gain benefits when you preserve rent for middle-income residents.

Remember that Freddie Mac’s loan eligibility and requirements can vary by loan product and property type. Working with an experienced partner like Walker & Dunlop can provide you with the best comparison between loan types and an understanding of the unique nuances of each.

Benefits of Freddie Mac financing

Clients choose Freddie Mac financing for multifamily properties because of its flexibility and generous loan terms. Core advantages include:

• Flexible loan amounts
• Competitive interest rates
• Long-term fixed-rate options
• Variable-rate options with prepayment flexibility
• Non-recourse loans (loans that allow the lender to seize only the collateral stated in the loan agreement, even if it doesn’t cover the loan’s total value). Note: When a Guaranty is required, it applies only to certain Borrower obligations.
• Multiple loan options for different property types (e.g., senior housing, TAH, student housing)
• Index Lock option: This option allows clients to lock the Treasury Index for fixed-rate loans any time after a signed application with an Optigo lender has been delivered to Freddie Mac, which reduces the client’s exposure to interest rate volatility. (Note: Does not apply to SBLs.)
• Availability of supplemental financing (Note: Not available for SBLs.)

Freddie Mac offers support for utility cost-savings features and upgrades, such as reducing water or energy consumption by 30 percent.

There’s also the benefit of tapping into a wide network of approved lenders that can streamline the loan origination process. This existing network makes it easier to access capital and keep developments moving forward.

Partner with Walker & Dunlop for Freddie Mac multifamily financing

Multifamily property loans by Freddie Mac offer clients a wealth of resources and capital that is easy to access and can be customized to fit clients’ needs. These loans play a critical role in shaping the multifamily housing market, and the client-friendly terms show Freddie Mac is ready to keep our housing market moving forward.

A good starting point is to explore the multifamily housing financing options with an experienced partner, such as Walker & Dunlop, who can navigate you through the nuances of these loans and what they require.

As a top Freddie Mac Optigo® Lender, Walker & Dunlop continues to deliver best-in-class financing solutions for clients by partnering with Freddie Mac in markets all across the country. Contact us today with questions or to learn more

Please note that Freddie Mac offerings and terms are subject to change.