Freddie Mac Tax-Exempt Loans
Freddie Mac Tax-Exempt Loans are designed for the purchase, refinancing, or renovation of Targeted Affordable Housing (TAH) properties with 4% LIHTC credits, have LTVs up to 90% of property market value and DSCRs as low as 1.15x.
Freddie Mac Tax-Exempt Loans for Affordable Housing Developments
Freddie Mac Insured Loans for the Acquisition or Refinancing of Affordable Multifamily Properties
If you're considering purchasing, refinancing or renovating an affordable housing property with 4% Low-Income Housing Tax Credits (LIHTCs), a Freddie Mac Tax-Exempt Loan could be a fantastic option. Freddie Mac Tax-Exempt Loans offer fixed-rate terms of up to 30 years and floating-rate terms of up to 10 years, as well as both interest-only and float-to-fixed rate loan options. Plus, these loans offer maximum LTV allowances of up to 90% of a property's market value and DSCRs as low as 1.15x for fixed-rate financing, and LTVs of up to 85% and DSCRs as low as 1.20x for floating-rate loans. Freddie Mac Tax-Exempt Loans also support eligible mixed-use properties and permit subordinate financing, making them an incredibly flexible tool for affordable property developers and investors.
To learn more, check out Freddie Mac’s official Tax-Exempt Loans Product Sheet or keep reading below for an in-depth explanation of the Freddie Mac Tax-Exempt Loan program.
Qualify for a freddie mac tax-exempt loan
Sample Freddie Mac Terms For Tax-Exempt Loans 2021
Size: Varies based on LTV and DSCR requirements.
Use: Financing for the acquisition or refinance of stabilized affordable multifamily properties with 4% Low-Income Housing Tax Credits (LIHTC) with at least 7 years remaining in the LIHTC compliance period.
Fixed-rate, floating-rate, and fixed-to-floating rate options, minimum loan term is typically 7 years. Maximum terms include:
Fixed-rate loans: Up to 30 years
Floating-rate loans: Up to 10 years
Construction loans: Up to 36-months
Fixed-rate loans: Priced on a spread to 10-year Treasuries
Floating-rate loans: Based on 30-day SIFMA or 1-month LIBOR index
Amortization: Up to 35 years
Fixed-rate loans: 85% of adjusted value or 90% of market value
Floating-rate loans: 80% of adjusted value or 85% of market value with interest rate hedge
Minimum DSCR: 1.15x for fixed rate, 1.20 for floating-rate, with interest rate hedge
Prepayment Penalty: Minimum 10 years prepayment protection, then typically yield maintenance
Subordinate Loans: Permitted, supplemental financing not available
Timing: Loans typically take between 75 and 90 days to close, with some lenders closing in as little as 30 days
Assumability: Loans are assumable with lender approval and a 1% fee
Avoids the risk and hassle of bond issuing
Interest-only loan options
Eligible mixed-use properties supported
Immediately funding and forwards
Subordinate financing allowed
Fixed, floating, and float-to-fixed rate options
Freddie Mac GAP financing may be available
Rate locks available after commitment (early rate locks may also be available)
Appraisal, Phase I Environmental Report, Physical Needs Assessment, Zoning, and Moisture Management reports are required; a Seismic Report may be required for properties in Seismic Zones 3 and 4
Application fees, commitment fees, and other fees required
Replacement reserves required
No supplemental loans allowed
2% rate lock fee typically required (refunded after property reaches stabilization)
Freddie Mac fee of $2,000 or 0.1% of loan amount (whichever is larger) also typically required