Freddie Mac Value-Add Loans
Three-year floating-rate money for renovations of $10,000 to $25,000 per unit, interest only, with no rate cap required. The as-is and as-stabilized tests both have to clear.
Financing a Light Renovation Without Two Closings
The Optigo Value-Add Loan covers the awkward middle of multifamily investing. The property is not distressed and it is not stabilized at market. It needs $10,000 to $25,000 per unit of work, and after the work it will support permanent agency debt that it cannot support today.
Freddie's structure is a three-year floating-rate, full-term interest-only loan with no interest rate cap required, which is unusual and worth pausing on. Most floating-rate bridge debt forces you to buy a cap, and cap costs have been a real line item since rates moved. Not requiring one is a genuine saving on a short hold.
What Counts as Value-Add Here?
A budget between $10,000 and $25,000 per unit, with at least half of it spent on unit interiors. Below that range the work is deferred maintenance and belongs in a replacement reserve. Above it, Freddie points you to its Moderate Rehab product instead. See Freddie Mac moderate rehab loans for where that line sits.
| Term | Three years, with one 12-month borrower extension and one further 12-month extension at Freddie's discretion |
|---|---|
| Structure | Floating rate, full-term interest only, no interest rate cap required |
| As-is sizing | 85% baseline maximum loan-to-purchase or LTV, 1.15x minimum amortizing coverage, subject to market adjustment |
| As-stabilized sizing | 75% baseline maximum LTV, 1.30x minimum coverage, subject to market adjustment |
| Sizing note rate | Based on a seven-year sizing note rate |
| Upfront fee | 0.5% of the loan amount, nonrefundable, subject to adjustment |
| Prepayment | Standard 12-month lockout, adjustable to borrower preference. After lockout you may pay off at any time with a 1% exit fee, waived on refinance into a qualified Freddie conventional loan |
| Cash equity | Generally 15% required |
| Renovation timing | Must start within 90 days of origination and finish within 33 months |
| Budget flexibility | Adjustable by up to 20% without further approval |
| Assumability | Not assumable |
| Extension fees | 0.5% for the borrower extension year, 1% for the Freddie extension year |
Terms confirmed against the Optigo Value-Add Loan term sheet, mf.freddiemac.com/docs/product/value_add.pdf, dated 04/25 and fetched July 31, 2026. Freddie states terms are subject to change and the Multifamily Seller/Servicer Guide controls.
Who Does Freddie Turn Away?
Several groups, and the exclusions are specific. Properties with more than 500 units are out. Seniors housing, student housing, manufactured housing, and cooperative communities are all ineligible. Conventional Small borrowers are not eligible. Guarantors must clear 1.5 times the standard minimum net worth and liquidity requirements.
Freddie also wants developers and operators with real rehabilitation experience in that specific local market, not just general multifamily ownership. This is not a first-deal product.
How the Two Appraised Values Drive Your Proceeds
The appraisal has to carry both an as-is and an as-stabilized value, and the loan is sized off an NOI pro forma under both sets of parameters. The binding constraint is whichever produces the smaller number.
Sponsors miss this. An as-stabilized story that gets you to 75% LTV is worthless if the as-is coverage does not reach 1.15x on today's rent roll. Model both before you go to application, and remember that the sizing uses a seven-year sizing note rate rather than the floating coupon you will actually pay. Our DSCR calculator handles the as-is side quickly.
What Happens at Maturity?
An engineer reviews the completed work for quality and completion. Freddie re-underwrites to its then-current credit policy, not the policy in force when you closed. Refinance into a qualified Freddie conventional loan and the 1% exit fee is waived; go anywhere else and you pay it.
That structure quietly makes this a two-step Freddie relationship rather than a standalone bridge loan. If you intend to sell at stabilization, price the exit fee into the model from day one.
Is Cash-Out Available?
For longer-term ownership, yes, provided a completion guaranty on the budgeted improvements is in place in an amount at least equal to the cash-out. Escrows for taxes, insurance, and replacement reserves are required either way, and the loan documents include a Value-Add Rider spelling out the rehabilitation obligations.
Send us the budget, the as-is rent roll, and the stabilized pro forma. We will tell you which of the two sizing tests binds and what it means for proceeds.
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