Freddie Mac NOAH Preservation Loan
NOAH Preservation Loans help nonprofits acquire Naturally Occurring Affordable Housing (NOAH) properties in order to keep rents affordable. NOAH Loans have LTVs up to 80% and DSCRs as low as 1.20x, flexible terms up to 15 years and flexible amortizations up to 30 years.
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If you represent a non-profit committed to preserving the supply affordable housing for Americans who need it, then Freddie Mac's NOAH Preservation Loan could be a great opportunity to fulfill your organization's mission. NOAH Preservation Loans offer LTV allowances of up to 80% and DSCRs as low as 1.20x. Plus, these loans have flexible terms up to 15 years and flexible amortizations up to 30 years, giving eligible nonprofits a variety of options in their quest to preserve affordable properties for lower-income families.
To learn more, check out Freddie Mac’s official NOAH Preservation Loans Product Sheet or keep reading below for an in-depth explanation of the Freddie Mac NOAH Preservation Loan program.
Sample Freddie Mac Terms for NOAH Preservation Loans in 2023
Size: Varies based on LTV and DSCR requirements.
Use: Providing the financing for eligible nonprofits to acquire Naturally Occurring Affordable Housing (NOAH) properties in order to preserve their affordability for tenants.
Terms: Up to 15 years
Amortization: Up to 30 years
Maximum LTV: 80%
Minimum DSCR: 1.25x, 1.20x available with underwriting approval
Prepayment Penalty: Yield maintenance or defeasance (based on transaction structure)
Eligible Properties: Garden, mid-rise, or high-rise multifamily NOAH properties
Eligible Borrowers: 501(c)(3) nonprofit organizations with affordable housing preservation as a stated part of their mission and experience with successful property ownership.
Recourse: To be determined by Freddie Mac at commitment
Affordability Requirements: At least 50% of units need to have affordable rents at 60%, 80%, 100%, or 120% of the area median income (AMI) based on market at the time of origination
Equity Requirements:
Nonprofit must meet at least one of the following:
Have an equity partner providing mission-focused equity
Contribute 100% of the equity themselves (leveraging soft debt as necessary)
Use the Freddie Mac Impact Gap Financing offering
Advantages:
Moderate rehabilitation permitted upon underwriting approval
LTV allowances up to 80%
DSCRs as low as 1.20x
Disadvantages:
Application fees, commitment fees, and other fees required
Servicing document review fee (discounted to $1,500 per review for items disclosed before origination)