Freddie Mac Tax-Exempt Loans
The Optigo Tax-Exempt Loan replaces a traditional bond credit enhancement with a single mortgage. Fewer documents, fewer participants, and 1.15x coverage on stabilized 4% LIHTC property.
What a Tax-Exempt Loan Actually Replaces
The Optigo Tax-Exempt Loan, or TEL, is Freddie Mac's answer to a specific piece of friction in affordable housing finance. Financing a 4% LIHTC property with tax-exempt bonds traditionally means a bond issue, a credit enhancement, a trustee, bond counsel, a rating, and a stack of documents that all have to close on the same day.
The TEL cuts that down. Freddie's own description is fewer documents, fewer participants, and less expense than a traditional bond credit enhancement. For a sponsor, the practical result is a shorter closing and a smaller cost of issuance line in the sources and uses.
Who Is This For?
Owners buying or refinancing stabilized affordable multifamily properties carrying 4% Low-Income Housing Tax Credits with at least seven years left in the tax-credit benefit stream. HUD Risk Share deals may also qualify. Freddie says it supports eligible mixed-use properties, and it has done TEL deals in 44 states and the District of Columbia.
| Eligible properties | Garden, mid-rise, or high-rise multifamily with 4% LIHTC, at 90% occupancy for 90 days |
|---|---|
| Term | Up to 30 years |
| Maximum amortization | 40 years |
| Minimum debt coverage | 1.15x |
| Maximum LTV | 85% of adjusted value or 90% of market value, based on appraised as-stabilized value |
| Funding | Immediate fixed-rate financing or a forward fixed-rate commitment |
| Minimum forward commitment term | 48 months, with extensions available |
| Collateral | First-lien mortgages on conventional, seniors housing, or student housing properties |
| Prepayment | Yield maintenance, minimum 10 years of call protection |
| Subordinate financing | Permitted, including USDA Section 515 loans; supplemental loans available |
| Pricing | Priced at a spread to 10-year Treasuries |
| Securitization | Yes, through M-Deals, ML-Deals, and Multi PCs |
Terms confirmed against the Optigo Tax-Exempt Loan term sheet, mf.freddiemac.com/docs/product/direct_purchase_of_tax_exempt_loans_term_sheet.pdf, dated 02/25 and fetched July 31, 2026. Freddie notes floating-rate options exist and that the Multifamily Seller/Servicer Guide controls.
Why Is the Coverage Requirement Only 1.15x?
Because the rents are restricted and the credits are doing part of the work. A 4% LIHTC property has a regulatory agreement setting maximum rents, which caps the upside and also caps the volatility. Equity from the credit sale reduces the debt the deal needs in the first place. Underwriting at 1.15x on that cash flow is a different risk than 1.15x on a market-rate lease-up.
Compare it against a conventional fixed-rate loan and the difference is stark. Conventional deals generally underwrite to 1.25x. The 10 basis points of coverage relief plus the 40-year amortization is a meaningful amount of proceeds on the same NOI.
TEL Against Bond Credit Enhancement
Freddie publishes both, and the choice is real. Bond Credit Enhancement with 4% LIHTC supports new construction, substantial rehabilitation, and preservation rehab with tenants in place, with fixed or variable rate tax-exempt bonds and terms out to 35 years. The TEL is aimed at stabilized properties.
If you are building or doing a gut rehab, the forward commitment structures under credit enhancement are the ones designed for it. See our page on Freddie Mac LIHTC bond credit enhancement for how those three executions differ.
If the property is already stabilized, occupied, and carrying credits with seven or more years to run, the TEL is generally the cheaper and faster path to the same permanent debt.
What About Rate Risk During the Forward Period?
A 48-month forward commitment is a long time to be exposed. Freddie's Index Lock lets a borrower lock the Treasury index, which is the part of the coupon that moves most, while the spread is set separately. That does not eliminate execution risk, but it takes the largest single variable off the table early.
What Should You Bring to the Conversation?
The regulatory agreement with the remaining compliance period, the credit allocation and its benefit stream, a rent roll showing the restricted rents against the market, three years of operating statements, and any subordinate soft debt already on the property. Soft debt terms decide as much about sizing here as the appraisal does.
Send us the deal. We will size it against the TEL, credit enhancement, and the HUD alternative side by side.
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