Freddie Mac's Capped ARM provides adjustable rate financing for the acquisition, refinance, and moderate rehabilitation of multifamily properties and is ideal for borrowers who expect a decrease in rates or those who want the flexibility of a short-term loan.

The Capped ARM provides time and cost savings with Freddie Mac's built-in interest rate cap while offering competitive, market-driven pricing that provides the lowest rates and spreads to the highest quality loans. The Capped ARM also provides flexibility in a broad range of loan terms: 5 to 30 year terms, up to 30 year amortization, supplemental mortgages on an adjustable or fixed rate basis, and the option of converting to a fixed rate with limited underwriting at conversion.

Program Highlights:

Eligibility
Garden, mid and high-rise apartments, co-ops and senior housing properties

Loan amounts
$3 million minimum. $100 million maximum.

Term/amortization
3 to 10 year terms
Up to 30 year amortization available
(interest only is available on a case-by-case basis)

Interest rate
Floating based on 1 or 3 month LIBOR

Personal recourse
None, except for typical lender "Carve-Outs"

Debt service coverage
1.25x minimum

Loan to value
80% maximum (7+ year terms)
75% maximum (less than 7 year terms)

Interest rate cap
Included in rate

Prepayment   
1 year lockout with 1% for the loan term or a declining prepay schedule

Origination fee
Required (varies by loan amount)

Commitment fee
Required (refundable)

Third party fees
Required (varies by loan amount)

Minimum occupancy requirement
85% for 90 days prior to loan closing

Replacement reserve impounds
Typically required

Supplemental mortgages
One per year on qualifying properties