Freddie Mac Student Housing Value-Add Financing 

In college towns and major cities across the U.S., the student housing market is alive and well — but to stay competitive, investors need to make sure their properties are modern, livable, and comfortable. Sometimes, that requires a little bit of work.

So, if you're interested in purchasing or refinancing a student housing property in order to make some light repairs or renovations, the Freddie Mac Student Housing Value-Add Loan could be the perfect choice. Student Housing Value-Add Loans offer LTV allowances of up to 85%, are interest-only, and are non-recourse, making them an incredibly attractive option for developers looking to make their student housing properties more profitable. 

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

Sample Freddie Mac Terms for Student Housing Value-Add Loans in 2023

Size:  Varies based on LTV and DSCR requirements 

Use:  Acquisitions and refinances of eligible Student Housing properties requiring moderate upgrades of $10,000 to $25,000 per unit

Terms:  3 years with one 12-month extension (borrower's request), and another optional 12-month extension (based on Freddie Mac discretion) 

Interest Rates:  Floating-rate interest only loan

Interest-Rate Caps:  Not required 

Maximum LTV: Up to 85%

Minimum DSCR:  1.20x 

Recourse:  Non-recourse with standard “bad boy” carve-outs

Eligible Borrowers:  Must have experience owning and operating similar Student Housing developments. Guarantors must have 1.5x the standard liquidity/net worth requirements.  

Eligible Properties: 

• Properties must have no more than 250 units or 625 beds

• Eligible properties are high-quality and only require light renovation

• REO (real-estate owned) properties in receivership or properties performing below market averages (especially those requiring improved management) are also eligible

• School must have at least 15,000 minimum enrollment

• Properties must be located within 2 miles of campus, with easy access to campus via walking or public transportation

Other Rehab Requirements: 

• Renovation must start within 90 days of origination and must be complete within 33 months

• Planned upgrades must be between $10,000 and $25,000 per unit or $4,000 to $10,000 a bed

• At least 25% and up to 50% of budget can be spent on unit interiors

Refinancing Test:  Not required

Assumability:  Not assumable 

Prepayment Penalty:  Loan can be paid off at any time with 1% penalty. No penalty if the loan is refinanced with Freddie Mac. 

Advantages:

• Budget can be increased up to 20% without approval

• Up to 75% of funds can be spent on exteriors

• Eligible mixed-use properties supported

• No refinancing test required

Disadvantages:

• Appraisal must include as-stabilized values

• Replacement reserves are generally required

• Loans are not assumable

• Additional rehabilitation escrow or completion guaranty required

• Application fee and good faith deposit also required