Freddie Mac Value-Add Financing 

Freddie Mac Insured Non-Recourse Loans for the Light Renovation of Multifamily Developments

If you're an investor or developer looking to make light upgrades to your property without going through the hassle of taking out an expensive construction loan, or, if you want to purchase a new property and make light renovations, the Freddie Mac Value-Add Loan could be a great option. Freddie Mac Value-Add Loans are specifically designed for properties with planned upgrades of between $10,000 and $25,000 per unit, and have LTV allowances of up to 85% and DSCR allowances of as low as 1.10x. Plus, these loans are available for acquisitions and refinances, are interest-only, and are non-recourse, making them an excellent choice for investors looking to increase the marketability and profitability of their multifamily properties. 

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

Sample Freddie Mac Terms For Value-Add Loans

Size:  Varies based on LTV and DSCR requirements, based on 7-year sizing note rate  

Use:  Acquisitions and refinances 

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:  1.10x -1.15x (depending on market) 

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

Eligible Borrowers:  Must have experience with the rehabilitation of multifamily properties. Guarantors must have 1.5x the standard liquidity/net worth requirements.  

 Eligible Properties: 

  • Properties must have no more than 500 total units

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

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

  • No Seniors Housing, Student Housing, or Manufactured Housing Communities permitted

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

  • 50% of budget should 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. 

Cash Equity Requirement:  Typically 15% 


  • Up to 85% LTV allowance

  • Budget can be increased up to 20% without approval

  • Up to 50% of funds can be spent on exteriors

  • Eligible mixed-use properties supported

  • No refinancing test required

  • Loan can be extended for one year (for borrowers in good standing) with a 0.5% extension fee

  • An additional one year extension (with Freddie Mac permission) is available for a 1% extension fee

  • Longer term owners can often get cash out (with a completion guaranty)


  • Requires third-party reports including Appraisal, Physical Needs Assessment, and Phase I Environmental Assessment

  • Appraisal must include as-stabilized values (underwriting needs to support a 1.30x DSCR and a 75% LTV based on as-stabilized property value)

  • Engineering review is required at loan maturity in order go ensure the quality and completion of work

  • Replacement reserves are generally required

  • Loans are not assumable

  • Additional rehabilitation escrow or completion guaranty required

  • Application fee and good faith deposit also required

  • 15% cash equity is usually required

  • 2% rate lock fee typically required (refunded after Freddie Mac purchases loan)

  • Freddie Mac fee of $2,000 or 0.1% of the loan amount (whichever is greater) also required