Freddie Mac's Interest Only program provides financing for the acquisition, refinance, and moderate rehabilitation of multifamily properties. Freddie Mac is committed to offering competitive, market-driven pricing that provides the lowest rates and spreads for the highest quality loans while providing flexibility and a broad range of loan terms.

In addition to 5-30 year terms, up to 28 year amortization and supplemental mortgages Freddie Mac offers full or partial interest only payments for borrowers looking to reduce their pay rate and maximize their cash flow. Freddie Mac also offers standard or early rate lock delivery options on their interest only loans, making it possible for borrowers to lock in a desirable interest rate as early as 12 months before the loan closes. Further cost savings are realized at the end of the loan term for borrowers who choose the fixed-to-float option which automatically converts the loan into a floating rate mortgage for an additional year during which time the borrower can arrange for new financing. The loan may be paid off at any time during the floating year at par.

Program Highlights:

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

Loan amounts
$5 million minimum. $50 million maximum.

Term/amortization
5 to 30 year term (standard)
5 to 15 year term (fixed-to-float)
Up to 28 year amortization available

Interest-only period
10 years (full interest only)
2 years (partial interest only)

Debt service coverage ratio
1.50x minimum (full interest only)
1.25x minimum (partial interest only)

Loan to value
70% maximum (full interest only)
80% maximum (partial interest only)

Delivery options
Standard and early rate lock options available

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

Prepayment   
Prepayable in full, subject to applicable yield maintenance

Origination fee
Required (varies by loan amount)

Commitment fee
Required (refundable)

Third party fees
Includes appraisal, environmental, and engineering reports

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

Replacement reserve impounds
Typically required

Assumability
Assumable with lender approval for standard fixed rate mortgage. Not assumable during the 1-year floating rate period.

Supplemental mortgages
One per year on qualifying properties