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Freddie Mac Value Add Loans For Modest Property Upgrades


“One-stop shopping” for upgrade and permanent financing

Product Snapshot:

  1. Short-term, negotiable financing for upgrades of $10,000 to $25,000 per unit
  2. Allows for a wide variation in borrower term and structure needs.
  3. Up to 50% should be spent on unit interiors.
  4. Budget can be adjusted up to 20% without additional approval

Competitive pricing 

Lower execution costs.

Interest-only and uncapped floating-rate loans available.


Eligible Borrowers

  • Developers/operators with experience in multifamily property rehab in local market with sufficient financial capacity
  • 1.5x standard minimum net worth and liquidity requirements for guarantors

Eligible Property Types

  • Less than 500 total units in good locations
  • Well-constructed properties requiring modest repairs
  • Market laggards that require capital infusion and new/improved management
  • Properties in receivership capable of improved performance
  • Seniors housing, student housing and manufactured housing communities not eligible


  • Maximum loan-to-purchase / loan-to-value (LTV) ratio: 85%
  • Minimum amortizing debt coverage ratios (DCR): 1.10x – 1.15x depending on market
  • Sizing based on 7-year note rate
  • Appraisal includes as-is and as-stabilized values
  • Underwriting must support 1.30x DCR and 75% LTV based on as-stabilized value supported by appraisal
  • Standard Freddie Mac underwriting based on as-is income and expense
  • Refinance Test not required
  • No pro-forma underwriting of future performance


  • Rehab must commence within 90 days of loan origination and completed within 33 months.
  • Acceptable budget: $10,000 to $25,000 per unit
  • Budget can be adjusted 20% without additional approval;
  • 50% of budget must be spent on unit interiors.
  • Completion Guaranty or rehab escrow required
  • Borrower/Servicer reporting required

At Loan Maturity/Refinance

  • Final engineer review of work completion and quality required
  • Refinance with Freddie Mac with no exit fee; otherwise 1% 
  • Freddie Mac will re-underwrite loan according to then-current credit policy parameters
  • One-year borrower extension for 0.5% extension fee assuming no default
  • Additional Freddie Mac extension with 1% extension fee

Standard fees apply, including application fee and good faith deposit


  • 3 years with one 12-month extension and one optional 12-month extension at Freddie Mac’s discretion
  • Floating-rate loan interest-only; no cap required
  • No lock-out; borrower may pay off loan any time with a 1% exit fee (waived if refinanced with Freddie Mac)
  • Acquisitions and refinances
  • Not assumable
  • Loan docs include Value-Add Rider which details rehab terms/requirements 
  • Escrows: real estate taxes, insurance and replacement reserves
  • 15% cash equity required
  • For longer term ownership, cash-out available with completion guaranty
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