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Supplemental Mortgage

Offers an additional financing option in conjunction with a newly originated or seasoned multifamily mortgage

Key Benefits

  • Split and seasoned supplemental options available
  • With a seasoned supplemental mortgage, obtain financing in addition to an existing mortgage without the cost of a full refinance
  • Both fixed- and floating-rate supplemental loans available
  • Supplemental financing behind seasoned securitized mortgages is a unique advantage of the Freddie Mac Capital Markets ExecutionSM (CME)

At-a-Glance Comparison

Product SummarySplit Supplemental MortgageSeasoned Supplemental Mortgage
Description A supplemental mortgage placed at the same time as a newly originated Freddie Mac first mortgage A supplemental mortgage placed at least 12 months after origination of the first mortgage or the previous supplemental mortgage; more than one seasoned supplemental mortgage is permitted
Eligible Mortgages1
  • Mortgages related to individual mortgages purchased through the Conventional Cash Mortgage Purchase Program, as well as Targeted Affordable Housing and conventional structured transactions, through our portfolio execution
  • Minimum amount: $1 million
  • Mortgages related to existing first mortgages
    • in good standing
    • purchased through the Conventional Cash Mortgage Purchase Program, as well as Targeted Affordable Housing and conventional structured transactions, through both our Capital Markets Execution and portfolio execution
  • Prior mortgages (first mortgages and any prior supplemental mortgages in place) must have remaining terms of 3 years or more
  • Minimum amount: $1 million
Eligible Borrowers Original borrower, Freddie Mac-approved transferee (for portfolio mortgages), or servicer-approved transferee (for CME mortgages)
Eligible Seller/Servicers All Program Plus® Seller/Servicers approved for the property’s location Program Plus Seller/Servicer currently servicing the first mortgage, or in the case of a CME first mortgage, the Program Plus Seller/Servicer that originated the CME first mortgage
Standard Loan Terms Coterminous with first mortgage; 30-year maximum Coterminous with first mortgage or may exceed first mortgage by up to 24 months
Prepayment Provisions Structured as a yield maintenance loan
Reserve Requirements
  • Real estate tax reserve, even if not required for the first mortgage
  • Other standard reserves at Freddie Mac's discretion
  • Note: Origination of a supplemental mortgage behind a CME mortgage will trigger collection of any deferred reserves for that CME first mortgage


Loan-to-Value (LTV) Ratios and Amortizing2 Debt Coverage Ratios (DCRs)

Supplemental Loans (Split or Seasoned3) Base Maximum LTV and Minimim DCRFixed-Rate LTV/DCRFloating-Rate LTV/DCR (DCR at max note rate)
AmortizingPartial-Term Interest-Only4Full-Term Interest-Only (using amortizing payment)AmortizingPartial-Term Interest-Only4Full-Term Interest-Only (using amortizing payment)
Acquisitions  
≥ 5-Year and < 7-Year Term 70% / 1.30x Ineligible 60% / 1.45x 70% / 1.05x Ineligible 60% / 1.20x
7-Year Term 80% / 1.25x 80% / 1.25x 65% / 1.40x 80% / 1.05x 80% / 1.05x 65% / 1.20x
> 7-Year Term 80% / 1.25x 80% / 1.25x 65% / 1.40x 80% / 1.05x 80% / 1.05x 65% / 1.20x
Cash-Out Refinances
≥ 5-Year and < 7-Year Term 65% / 1.35x Ineligible 60% / 1.50x 65% / 1.10x Ineligible 60% / 1.25x
7-Year Term 75% / 1.30x Ineligible 60% / 1.45x 75% / 1.10x Ineligible 60% / 1.25x
> 7-Year Term 75% / 1.30x 75% / 1.30x 60% / 1.45x 75% / 1.10x 75% / 1.10x 60% / 1.25x

1 All LTVs and DCRs are calculated based on the sum of the debt service and unpaid principal balance of the first mortgage and all existing and proposed supplemental mortgages. LTVs and DCRs for a split supplemental mortgage are the same as the first mortgage.

2 The DCR calculated for the partial-term interest-only and full-term interest-only period uses an amortizing payment.

3 A seasoned supplemental mortgage is not allowed if fewer than 3 years is remaining on the first mortgage; if fewer than 5 years remains on the first mortgage, add 5 bps to the DCR.

4 For partial-term interest-only loans, there must be a minimum amortization period of 7 years for loans with terms greater than 7 years. Acquisition loans with 7-year terms may have up to 1 year of partial-term interest-only. For terms of 10 years or more, Sellers should contact their Freddie Mac representative to determine the allowable term of partial-term interest-only.

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.

© 2013 Freddie Mac

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