Freddie Mac Student Housing Loans
Freddie Mac Student Housing Loans range between $5 million - $100 million (though larger and smaller loans are considered), have LTVs up to 80%, and provide flexible, non-recourse terms between 5-10 years (up to 30 for non-securitized, fixed-rate loans).
Better Financing Starts with More Options$1.2M offered by a Bank at 6.0%$2M offered by an Agency at 5.6%$1M offered by a Credit Union at 5.1%Click Here to Get QuotesCustom Freddie Mac-Insured Multifamily Loans for Student Housing Properties
With millions of college students througout the U.S., there's never been a better time to invest in the student housing market — and Freddie Mac is here to help.
With Freddie Mac Student Housing Loans, investors and developers can help provide housing for the next generation of American leaders, thinkers, and doers, all while accessing LTVs of up to 80%, flexible loan terms of between five and 10 years (or up to 30 years for non-securitized, fixed-rate loans), and Freddie Mac's reliable, non-recourse loan execution. Plus, Freddie Mac Student Housing Loans also allow supplemental financing and permit early rate-lock and index-lock options in order to reduce risks for borrowers.
Keep reading below to learn more, or click here to download our easy-to-understand Freddie Mac Student Housing Loan term sheet.
Sample Freddie Mac Terms for Student Housing Loans in 2023
Size: $5 million - $100 million (though smaller and larger loan amounts will be considered)
Use: Acquisition or refinance
Terms: 5-10 years (Up to 30 years if loan not purchased for securitization)
Amortization: Up to 30 years, interest-only loans available
5-7 Year Loans:
Amortizing: 75%/1.35x
Partial Term Interest-Only: 75%/1.35x
Full Term Interest-Only: 65%/1.45x
7 Year Loans:
Amortizing: 80%/1.30x
Partial Term Interest-Only: 80%/1.30x
Full Term Interest-Only: 70%/1.40x
7+ Year Loans:
Amortizing: 80%/1.30x
Partial Term Interest-Only: 80%/1.30x
Full Term Interest-Only: 70%/1.40x
Recourse: Non-recourse with standard “bad boy” carve-outs
Prepayment Options: Yield maintenance until securitization, 2-year lock-out period following securitization, defeasance allowed after securitization. Yield maintenance for securitized loans is permitted for an additional fee. No pre-payment premiums required in the last 90 days of the loan.
Assumability: Loans are assumable with lender approval, but require a 1% assumption fee paid to Freddie Mac. May also require an underwriting fee paid to the lender (typically around $5,000.)
Eligible Borrowers:
Eligible borrowers include limited partnerships, limited liability companies, corporations, or a tenancies in common (TICs) with 10 or fewer members
In some circumstances (and with specific requirements), general partnerships, REITs, limited liability partnerships, and some trusts may also be eligible
Typically, borrowers must be single purpose entities (SPEs), however, on loans less than $5 million, borrowers may be able to be Single Asset Entities instead
For tenancies in common (TICs), each member needs to be a SPE
Eligible Properties:
"Purpose-built student housing properties; must have a minimum of one bathroom for every two bedrooms, and each apartment must have a separate full kitchen"
High-rise, mid-rise, and stabilized garden properties with a 50%+ student concentration are also eligible
College/university must have 8,000+ students (combining students multiple schools in a close are will also be considered)
Student housing property must be less than 2 miles from college/university or located on a public transport route
Residence halls, buildings with shared common bathrooms, and buildings with dining halls not eligible
Ground leases on university-owned permitted under certain circumstances (prior approval is required)
Refinancing Test: No test needed for amortizing loans with a DSCR of at least 1.40x and an LTV of less than or equal to 65%. Interest-only loans must pass a refinancing test before they are approved.
Lease Requirements: Generally, 12-month leases are preferred, though shorter leases may be accepted. Parental guaranty is preferred.
Timing: Usually around 60- 75 days between application and closing
Advantages:
Very competitive interest rates
Up to 80% LTV for some properties
Loans are non-recourse
Supplemental loans allowed
Early rate-lock, fast-track early rate-lock, and index-lock options allowed
Loans are fully assumable (with fees)
Disadvantages:
Requires third-party reports including Phase I Environmental Assessment, Appraisal, Physical Needs Assessment, Seismic Report may be required for properties in Seismic Zones 3 and 4. Engineering Report may also be required.
Requires annual replacement reserves of $150/bedroom or $300/unit
Application fees required: $2,000 or 0.1% of loan amount
Typically requires a loan origination fee
Typically requires between $8,000 and $12,000 in legal fees
Lender application fees also required (avg. of $15,000, including third-party reports, but may vary based on specific lender)
2% rate lock fee usually required (refunded after Freddie Mac purchases loan, usually around 30 days post-closing)