For refinancing or acquiring newly constructed properties.
Borrowers must have experience with new construction and/or lease-up properties, and generally have strong financial capacity and real estate management expertise with good performance and credit history.
Eligible Property Types
- Well-constructed properties, exhibiting strong lease-up trends, and located in good locations and markets
- Student housing, seniors housing and manufactured housing community transactions are not eligible
- Stabilization expected within 12 months of funding
- Fixed- and floating-rate loans
- Interest-only (I/O) available during the lease-up period
Targeting strong markets and locations
LTV and DSCR
- Maximum LTV on refinance is 75% (as-stabilized) and on an acquisition 70% (as-stabilized)
- Minimum DSCR on a refinance and acquisition is 1.30x.
Minimum Cash Equity Requirement
15% on a refinance and 25% on an acquisition
Minimum Credit Enhancement Requirements
- A Lease-Up Credit Enhancement is required for all Lease-Up transactions
- The form of the Lease-Up Credit Enhancement will be determined by Freddie Mac
- The Lease-Up Credit Enhancement must be at least 5% of the unpaid principal balance (10% if the Lease-Up Credit Enhancement is a guaranty, subject to additional conditions)
- Release of Lease-Up Credit Enhancement will occur once the property has achieved the required amortizing DCR based on average performance of the past 3 months, net rental income for the past 1 month meets or exceeds the level necessary to reach the required amortizing DCR, and has met other standard conditions as set forth by Freddie Mac
- If the required DCR is not reached within 12 months, the Lease-Up Credit
- Enhancement will be used to resize the loan and recast the payments.
At Rate Lock
- 50% occupied
- 60% leased
- 60% or more Certificates of Occupancy issued
- 1.05x IO DSCR on a refinance; 1.00x IO DSCR on an acquisition
- 65% occupied
- 75% leased
- 100% of Certificates of Occupancy issued
- Minimum 90% occupied
- 1.25x amortizing DSCR for 3 consecutive months
The appraisal report must provide the as-is and as-stabilized values for the property
Premier Sponsors and Markets
Additional flexibility available on a case-by-case basis through an assessment of the sponsor and market as determined by Freddie Mac.