Multifamily PCs are secured by structures with five or more units designed principally for residential use, with terms generally ranging from five to 30 years. All Multifamily Gold PCs and all Multifamily ARM PCs offer the Freddie Mac guarantee of timely payment of interest and full and final payment of scheduled principal. In addition to attractive yields, one of the most prominent advantages of multifamily securities is the high level of call protection.
Freddie Mac's multifamily mortgage credit, appraisal and underwriting guidelines generally require all multifamily mortgages it purchases to conform to the guidelines outlined below:
- Secured by properties with occupancy rates of at least 90 percent for the three months prior to loan closing and as of the loan closing date.
- Debt coverage ratios of at least 1.25 for the first mortgage and 1.15 for the first mortgage and any subordinate mortgages.
- Loan-to-value ratios not exceeding 80 percent for the first mortgage or 85 percent for the first mortgage and any subordinate mortgages.
- Federal Housing Administration (FHA) mortgages must conform to the guidelines established by the FHA.
Freddie Mac may modify the guidelines or grant waivers for some multifamily mortgages when compensating factors (such as higher debt coverage ratios) are present.