Flexible Freddie Mac Tax-Exempt Loans for Affordable Housing Developments

Freddie Mac Insured Loans for the Acquisition or Refinancing of Affordable Multifamily Properties

Freddie Mac's Tax-Exempt Loans are a great way to purchase or refinance an affordable housing property with 4% Low-Income Housing Tax Credits (LIHTCs) in order to make renovations. However, borrowers looking for more flexibility may want to consider it's newer sibling, the Freddie Mac Flexible Tax-Exempt Loan. Freddie Mac Flexible Tax-Exempt Loans have a 3-year, interest-only floating-rate period, followed by an up to 15-year fixed-rate period, which can significantly reduce payments during a property's rehab period. Plus, underwriting criteria for Flexible Tax-Exempt Loans is based on traditional Tax-Exempt Loans, which means they offer maximum LTV allowances up to 90% of a property's market value, and DSCRs as low as 1.15x. 

To learn more, check out Freddie Mac’s official Flexible Tax-Exempt Loan Product Sheet or keep reading below for an in-depth explanation of the Freddie Mac Flexible Tax-Exempt Loan program.

Sample Freddie Mac Terms For Flexible Tax-Exempt Loans

Size:  Varies based on LTV and DSCR requirements. 

Use:  Financing for the acquisition or refinance of stabilized affordable multifamily properties. 

Terms:  Floating-rate, interest-only loan for 3 year period (during rehab), before converting to fixed-rate, amortizing financing for the rest of the loan (up to 18 year total loan term permitted.) 

Interest Rate:  Floating-rate based on SIFMA or LIBOR index 

Interest-Rate Caps:  Required for the floating-rate period of the loan 

Amortization: Up to 30 years

Maximum LTV:  85% of adjusted value or 90% of market value (based on fixed-rate Freddie Mac Tax-Exempt Loans) 

Minimum DSCR:  1.15x  (based on fixed-rate Freddie Mac Tax-Exempt Loans) 

Eligible Borrowers:  Well-qualified Targeted Affordable Housing-approved borrowers. 

Prepayment Penalty:  10-year lock out

Refinance Test: Based on the fixed-rate 


  • 3-year interest-only loan period reduces debt service payments during renovation (when property revenue may be significantly lower)

  • Eligible mixed-use properties supported

  • Does not change loan size or create additional proceeds

  • Deals with 4% LIHTC credits can be underwritten to 1.15x DSCR


  • No early rate locks or spread-locks allowed, standard delivery only

  • No supplemental loans allowed during floating-rate period