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Freddie Mac Multifamily/Apartment Loans


Freddie Mac Multifamily

(Check out our article about where commercial interest rates are headed in 2023)


Freddie Mac apartment/multifamily financing is one of Apartment Loan Store's lowest rate apartment loan programs. These loans are sold to Freddie Mac for securitization in mortgage pools on Wall Street. Freddie Mac’s multifamily loan program includes market rate, senior housing, student housing and affordable housing.


Freddie Mac Apartment Loan Terms and Requirements:                              

Minimum Loan $1,000,000 Minimum Credit Score 660
Up to 80% Loan to Value  Net Worth equal to loan size
30 year amortization  9 – 12 months post closing liquidity required
5,7 and 10 year fixed rates No replacement reserves
Converts to an ARM Non-recourse
Interest Only for 1 – 10 years Tax Returns not required
Assumable  Step down prepayment available
90% occupancy for 90 days DSCR: 1.20 – 1.25


Freddie Mac Multifamily Financing has some of the lowest rates for 5-plus unit multifamily properties. Loans go up to 80% LTV.  Rates can be fixed from 5 to 10 years with a 30 year amortization. Up to 10 years interest only payments are available. These loans are stated income in nature and non-recourse.

In this article, we are going to look at the great benefits of a Freddie Mac Multifamily financing and the loan guidelines. We will also answer the following questions: What types of loans does Freddie Mac offer? Why does Freddie Mac have the best interest only program?  Many of our borrowers are cash flow based and prefer the benefits of a low rate interest only loan. They know that as long as they can raise their rents over time, their property value is going to go up significantly – so they are not concerned about not paying down the mortgage. During the interest only period, all of the monthly payment is going toward interest resulting in a much lower monthly payment. Our conservative borrowers prefer paying interest and principal payments, which lower their principal balance each month. 


Freddie Mac Multifamily Guidelines

The first part of this article is on the market rate Freddie Mac loan. A great benefit of Freddie Mac loans is their low interest rates. Freddie Mac loans are sold in mortgage pools for securitization on Wall Street. Freddie Mac not only has market rate loans, but give a hefty discount to the interest rate for affordable rent apartment properties.  A great benefit is up to 10 years interest only loans.  Loans for Student Housing and Senior Housing are also available. 

Freddie Mac multifamily loans are amortized for a period of 30 years, and have a fixed rate period of 5, 7 or 10 years.

Freddie Mac multifamily loans go up to 80% loan to value. Cash out refinancing up to 80% LTV is not a problem. These loans are easier to qualify for than conventional multifamily bank loans in that the minimum credit score is 660, and tax returns are not required. So the loan is stated income in nature. With Freddie Mac loans, the strength of the property is more important than the financial strength of the borrower. Thus, some borrowers will qualify for Freddie Mac financing if their property is strong, and yet their personal income is not very strong. A minimum net worth equal to the loan size is required along with the equalivant of 12 months of loan payment in savings after the loan is closed. Prior multifamily property ownership is not required.

 One of the best features of a Freddie Mac Multifamily Loan is that it is non-recourse.  This means that there are no personal guarantees required. The loan is made to an ownership entity like a Limited Liability Company (LLC) or Limited Partnership (LP), not to the individual. Non-recourse financing makes it much more desirable for the borrower to raise part of the down payment from investors. Often these are high net worth individuals who do not want to put all of their personal assets and bank accounts at risk with a recourse loan that will require personal guarantees.     


Freddie Mac Apartment Loan Terms and Requirements:    

  • 660 is the minimum credit score
  • $1M is minimum loan size
  • Loan is amortized for 30 years
  • Loan to value maximum is 80%
  • Loan Term up to 20 years
  • Net worth needs to be at least the loan size
  • Requirement of 9 to 12 months of post closing cash
  • Fixed rates of 5,7 and 10 years.
  • Loan converts to ARM
  • Loan is non-recourse
  • Replacement reserves not required
  • Interest only option available for 1 to 10 years
  • Loan is assumable
  • There is no requirement for tax returns
  • Debt service ratio is 1.20 to 1.25
  • Occupancy requirement of 90% for 90 days
  • Prepayment penalty is declining or yield maintenance
  • Time for closing is 45 – 60 days


INTEREST ONLY Freddie Mac Loan

If you are looking for interest only financing, Freddie Mac can’t be beat. This is because with Freddie Mac you can get 10 years of interest only payments at a fixed rate. And there is only a small rise in the interest rate. Importantly, nearly every loan company increases the rate of interest when it comes to interest only financing. Freddie Mac is superior also because most other lenders will only give 2 to 4 years of payments that are interest only, followed by the loan changing to payments that are amortized.

To give you an idea of the strong amount of savings you can get on your payments with Freddie Mac, let’s look at the following example:

An investor gets a $3M loan. The rate of interest is 5.00% is being used for example purposes only (Note that at the time of this article rates are significantly lower). The interest only payments on the loan at 5.00% will be $12,498. You will have $3,606 more money in your pocket each month compared to a loan that does not have interest only payments. This is $43,272 more net cash flow per year – a huge amount. However, if you live in a small metropolitan statistical area, you will have a higher interest rate.

 Do note that if you want to lower your principal balance each month, you can choose to not have interest only financing, and have a lower interest rate with the same excellent loan.

There are pros and cons for interest only financing versus financing without interest only payments. Carefully examine both choices and pick the one that works best for you.


Here are features of a Freddie Mac multifamily interest only full term loan:

  • 10 years interest only fixed rate financing
  • If you desire a loan of a 20 year term, at the end of 10 years of no interest payments, you can switch your loan over to an adjustable rate mortgage.
  • $1M is the loan size minimum.
  • The loan size has no maximum limit.
  • Whether you want to purchase or refinance, you get 80% loan to value.
  • Loan assumable with a fee of 1.00 percent
  • Tax returns are not required.
  • Income verification is not required.
  • Loan is non-recourse
  • Your credit score needs to be a minimum of 680
  • Debt service ratio of 1.25
  • Your net worth has to be at least the size of the loan.
  • Required is 90% occupancy for a period of 90 days. But in markets that have high occupancy you can get a waiver regarding this.
  • You have the option of a declining prepayment penalty or yield maintenance prepayment penalty.
  • You need to have twelve months payments cash at post-closing.


By Terry Painter/Mortgage Banker

Member Forbes Real Estate Council





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HUD Loans are one of the best options with the current level of interest rates. For a complete guide to HUD Multifamily Loans please go here:

HUD Multifamily Loans - The Complete Guide