Freddie Mac Workforce Housing Mezzanine Loans
Freddie Mac no longer publishes a Workforce Housing Mezzanine term sheet. Here is what the program was, what replaced it, and the three routes multifamily sponsors use today to get above a single first mortgage.
Where the Workforce Housing Mezzanine Loan Stands Today
Start with the part most write-ups skip. Freddie Mac's two published product lists, Conventional and Targeted Affordable Housing, carry no Workforce Housing Mezzanine term sheet as of July 31, 2026. The workforce housing document Freddie publishes today is Workforce Housing Preservation, and it is not a mezzanine loan at all. It is a set of voluntary rent restrictions you agree to inside a conventional first mortgage.
That matters if you are sizing a deal right now. The 90% combined loan-to-value and 1.05x combined coverage that older articles quote for this program are not parameters you can go get today by asking for them. Ask your Optigo lender what is actually available on your specific deal before you build a capital stack around a number you read on a website, including this one.
What Was the Mezzanine Structure?
The idea was straightforward. Freddie originated a 10-year conventional first mortgage and a mezzanine piece behind it in one process, the mezzanine borrower pledged its equity in the senior borrower rather than the real estate, and in exchange the sponsor accepted a covenant capping rent growth on most of the units. Combined proceeds went higher than a first mortgage alone would reach. The covenant, not the collateral, was what bought the extra leverage.
Mezzanine debt in general still works that way. It sits behind the mortgage, it is secured by equity interests instead of a lien on the property, and it prices well above senior debt because the lender is second in line to everything.
What Freddie Publishes Today
Workforce Housing Preservation is an option you add to a fixed-rate conventional loan. You agree in the loan documents to hold rents on a share of units at levels affordable to households at 80% of area median income, or a higher AMI level in expensive markets. In return you get pricing that Freddie describes as competitive.
| Set-aside units | Varies by market, with a programmatic floor of 20% of units |
|---|---|
| Eligible loans | All fixed-rate loans with a term of seven years or longer |
| Preservation period | The lesser of the loan term or 10 years |
| Credit parameters | 1.25x coverage and 80% LTV maximum; 35-year amortization may be available at lower leverage, subject to underwriting review |
| Rent restrictions | Governed by the Freddie Mac loan agreement |
| Ongoing compliance | Annual borrower certification of rent monitoring. No tenant income tests |
| Expiring use agreements | Properties with a regulatory agreement expiring in the first half of the loan term may preserve at least 20% of units at the expiring affordability levels for the rest of the term |
Terms confirmed against the Freddie Mac Workforce Housing Preservation fact sheet at mf.freddiemac.com/docs/workforce-housing-preservation.pdf, fetched July 31, 2026. Freddie states that terms are subject to change and that the Multifamily Seller/Servicer Guide controls.
How Does This Compare With the Old Mezzanine Deal?
The trade is the same in spirit and much smaller in size. You still give up rent growth in exchange for better terms. But the reward is pricing, not proceeds, and the maximum credit parameters land at 80% and 1.25x rather than 90% and 1.05x. No income testing is a real operational saving for a market-rate operator who has never run a compliance file.
The set-aside floor also moved the right direction for most owners. Twenty percent of units is a very different commitment than 80%.
Getting Above a First Mortgage on a Multifamily Deal
If the reason you landed here is proceeds rather than affordability, the workforce program is probably not your answer. Three published Freddie routes go past a single first mortgage.
Supplemental loans. A second Freddie loan behind an existing Freddie first, available at least 12 months after the first loan closed. On a seven-year term the combined parameters run to 80% LTV and 1.25x coverage, and the minimum supplemental amount is $1 million. See Freddie Mac supplemental loans for how the sizing tiers work.
Lender preferred equity. Freddie now permits an Optigo lender to make a preferred equity investment in the borrower under a mortgage that same lender sells to Freddie, and to keep servicing the mortgage. The lender must hold at least 5% of the investment vehicle and must have the right to take control of the borrower. Section 9.9 of the Seller/Servicer Guide governs it.
The Transitional Line of Credit. A portfolio tool rather than a single-asset one, but it is where sponsors with several assets go for flexible proceeds. Details are on our Freddie Mac credit facility page.
Who Should Actually Look at Preservation?
Owners of stabilized workforce product in markets where their in-place rents already sit near the 80% AMI line. If that describes your property, you are agreeing to something you were going to do anyway, and you get paid for it in spread. If you underwrote 4% annual rent growth to make the deal pencil, a 10-year rent covenant will cost you more than the pricing benefit returns.
Run the two versions before you decide. Our DSCR calculator and debt yield calculator will show you what the constrained rent roll does to your coverage in year five.
Tell us about the property and we will come back with what the agencies will actually do on it, including whether any legacy mezzanine structure is still available through a lender relationship.
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