Freddie Mac Loans for the Preservation/Renovation of Affordable Properties

Freddie Mac Insured Financing for the Rehabiliation and Preservation of Properties with Low-Income Housing Tax Credits (LIHTCs)

Borrowers interested in renovating affordable properties with new Low-Income Housing Tax Credits (LIHTCs) need look no further than Freddie Mac's Preservation Rehabilitation Loan. Preservation Rehabilitation Loans support the acquisition, refinancing and rehabilitation of affordable LIHTC properties, particularly those that are using Bond Credit Enhancements with 4% LIHTC, Tax-Exempt Loans with 4% LIHTC, and 9% LIHTC Cash Loans. Plus, Preservation Rehabilitation Loans support property rehabilitations with tenants in place, and can support LTVs as high as 90% of a property's market value, and DSCRs as low as 1.15x, making them an incredible tool for LIHTC developers and investors. 

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

Sample Freddie Mac Terms For Preservation Rehabilitation Financing

Size:  Loans are based on projected post-rehab net operating income (NOI), as well as LTV and DSCR requirements. Cash or a letter of credit collateral is needed to fund the gap between the supportable amount debt based on the property's current NOI and the actual bond mortgage loan amount (collateral will be released after stabilization.) 


Preservation Rehabilitation Financing can be used for the acquisition/refinancing and moderate rehabilitation of affordable properties with new Low-Income Housing Tax Credits (LIHTCs). In particular, it can be used with: 

  • Bond Credit Enhancements with 4% LIHTC

  • Tax-Exempt Loans with 4% LIHTC

  • 9% LIHTC Cash Loans


  • Minimum term: Remaining LIHTC compliance period or 15 years, whichever is less; 15 years with HUD Risk Sharing

  • Maximum term: 35 years; rehabilitation/stabilization period (maximum of 24 months) will be included in loan term

Amortization:  Up to 35 years. Loans are interest only during the rehab/stabilization period. 

Maximum LTV/Minimum DSCR: 

  • Tax-Exempt Financing with 4% LIHTC:

    • Variable-rate with cap hedge: 80% of adjusted value or 85% of market value/1.20x

    • Fixed-rate: 85% of adjusted value or 90% of market value/1.25x

  • 9% LIHTC Cash Loan: 90% of market value/1.15x for new tax credits

Eligible Properties:  

  • Tax-Exempt Financing with 4% LIHTC: Garden, mid-rise, or high-rise properties with new 4% Low-Income Housing Tax Credits (LIHTCs) undergoing moderate rehabilitation (must have tenants in place.)

  • 9% LIHTC Cash Loan: Garden, mid-rise, or high-rise properties with new 9% LIHTCs undergoing moderate rehabilitation (also must have tenants in place.)

Prepayment Penalty: 

  • Tax-Exempt Financing with 4% LIHTC: Fee maintenance

  • 9% LIHTC Cash Loan: Yield maintenance


  • Eligible mixed-use properties supported

  • Offers LTVs of up to 90% of market value for some loans

  • Amortizations of up to 35 years

  • Subordinate financing is allowed


  • Typically requires letter of credit collateral to fund gap between supported loan amount and size of actual bond mortgage