Freddie Mac Loan Incentives for Resource Efficient Multifamily Developments 

Green Benefits for Freddie Mac Insured Multifamily Loans for Conventional, Seniors, and Targeted Affordable Housing Developments 

Today, many multifamily investors are finding that by reducing their resource use, they can also save money, and, with Freddie Mac's Green Advantage program also offering significant financial incentives, it's never been a better time to go green. Freddie Mac's main Green Advantage incentive programs include Green Up and Green Up Plus, each of which offers increased LTV allowances and reduced DSCR requirements to properties that can demonstrate a 25% reduction in water/sewer consumption. In order to demonstrate that reduction, Freddie Mac borrowers will need to get a Green Assessment, the cost of which (up to $3,500) is reimbursed by Freddie Mac at loan closing. However, properties that have gotten other kinds of green certifications, including certain ENERGY STAR, Green Globes, and EarthCraft certifications, and have at least 20% affordable units are also eligible for the Green Advantage program. 



Sample Freddie Mac Terms For Green Advantage Financing

Minimum Projected Consumption Reduction: 

  • Green Up: 25% of energy or water/sewer consumption based on Green Assessment
  • Green Up Plus: 25% of energy or water/sewer consumption based on Green Assessment Plus

Maximum LTV/Minimum DSCR:  

  • As Is: -0.05x DSCR reduction, subject to 1.20x or product limit. +5% LTV subject to greater of 85% or project limit. 
  • As-Improved:  "Must meet policy compliant DSCR/LTV." Amounts based on as-improved NOI/appraised value. 

Timeline:  Borrowers have 2 years to complete improvements

Other Eligible Green Certifications: 

If your property has at least 20% affordable units and is already certified under one off the below programs, it may also qualify for discounted loan pricing: 

  • EarthCraft, Greater Atlanta Home Builders Association & South Face
  • ENERGY STAR® for Multifamily, EPA
  • ENERGY STAR® for Qualified Multifamily High-Rise, EPA
  • Green Communities, Enterprise Community Partners
  • Green Globes, Green Building Initiative
  • GreenPoint Rated, Build It Green
  • LEED, US Green Building Council
  • National Green Building Standard (NGBS), Home Innovation Research Labs

Green Rebate:  Even without using any of the Green Advantage options mentioned above, eligible borrowers (those with properties with 20+ units) can still get a $5000 green rebate from Freddie Mac for getting an EPA ENERGY STAR Score®

C-PACE:  Commercial PACE financing may be available upon request 

Advantages:

  • Allows for increased LTVs and decreased DSCR requirements 
  • Eligible mixed-use properties supported 

Disadvantages:

  • Green Assessment required 
  • Property energy and water usage need to be recorded in an EPA Portfolio Manager for the calendar years up to the fourth year of the loan