Freddie Mac Acquisition Upgrade and Acquisition Rehabilitation Mortgages
Offers financing for the purchase of multifamily properties undergoing upgrades or major rehabilitation for repositioning in the market
Key Benefits
- The ability to obtain funds to purchase, and upgrade or rehabilitate an existing multifamily property
- Guaranteed permanent financing since the acquisition/upgrade or rehabilitation proceeds are funded at the same time
- Reduced interest-rate risk when combined with the Freddie Mac Early Rate-Lock delivery option
- Clearly defined lending parameters and predictable rate-lock and closing timeframes
At-a-Glance Comparison
| Product Summary | Acquisition Upgrade | Acquisition Rehabilitation MortgageSM |
| Eligible properties |
Multifamily properties excluding seniors housing |
Multifamily properties excluding seniors housing |
| Minimum Upgrade/Rehab Costs Per Unit |
$3,000 per unit | $10,000 per unit |
| Minimum Upgrade/Rehabilitation Costs | Lower of $10,000 per unit or 20% of acquisition cost but at least $3,000 per unit | Lower of $30,000 per unit or 30% of acquisition cost |
| Maximum Period to Stabilization | 24 months | 36 months |
| Stabilization Period Extension Option | 2-6 months or 1-12 months, for fee | 2-6 months or 1-12 months, for fee |
| Completion Escrow Required | Yes, in the form of cash or Letter of Credit | Yes, in the form of cash or Letter of Credit |
| Debt Service Coverage Shortfall Reserve Required | Yes, in the form of cash or Letter of Credit; 110% of the shortfall | Yes, in the form of cash or Letter of Credit; 110% of the shortfall |
| Financing Gap Coverage | Yes, in the form of cash or Letter of Credit to cover 100% of the gap | Yes, in the form of cash or Letter of Credit to cover 100% of the gap |
Loan-to-Value Ratio and Debt Coverage Ratio (Fixed)
| Acquisition Upgrade / Rehabilitation | As Is DCR / Lower of Maximum LTC / LTP | As Stabilized DCR / LTV | |||
|---|---|---|---|---|---|
| DCR (Interest-Only) | Loan-to-Cost (LTC) | Loan-to-Purchase Price (LTP) | DCR | LTV | |
| Acquisition Upgrade Mortgage Fixed-Rate (Amortizing Only) | |||||
| = 7 Year Term | 1.25x | 80% | 85% | 1.25x | 80% |
| < 7 Year Term | 1.25x | 80% | 85% | 1.30x | 70% |
| Acquisition Rehabilitation Mortgage Fixed-Rate (Amortizing Only) | |||||
| = 7 Year Term | 1.20x | 80% | 85% | 1.25x | 80% |
| < 7 Year Term | 1.20x | 80% | 85% | 1.30x | 70% |
Contact Us
- Download and print Freddie Mac's contact information
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The information in this document is not a replacement or substitute for information found in the Freddie Mac Multifamily Seller/Servicer Guide. Terms set forth herein are subject to change without notice.