Freddie Mac Bond Credit Enhancement - 4% LIHTC
Freddie Mac offers financing for the new construction, substantial rehabilitation and moderate rehabilitation of affordable Low-Income Housing Tax Credit (LIHTC) multifamily properties that are funded entirely or in part by the sale of fixed- or variable-rate tax-exempt bonds. The Freddie Mac Bond Credit Enhancement - 4% LIHTC product was designed to provide the best financing solution for customers doing their part to preserve affordable housing across the nation. We invite you to talk to one of our Seller/Servicers through the Freddie Mac Targeted Affordable Housing (TAH) Delegated Network to learn more about our affordable housing products and offerings.
Key Benefits
- Offers various financing alternatives for your affordable housing development.
- Fixed-rate loans with HUD Risk Sharing may be allowed a more favorable LTV term.
At-a-Glance Comparison
| Product Summary | Forward Commitment | Immediate Funding | Moderate Rehabilitation |
| Product Description | Forward commitment for new construction or substantial rehabilitation of affordable multifamily properties with 4% LIHTC | Financing for the acquisition or refinance of stabilized affordable multifamily properties with 4% LIHTC | Financing for the moderate rehabilitation (with tenants in place) of affordable multifamily properties with 4% LIHTC |
| Type of Funding | Funded and unfunded construction financing; permanent financing at conversion | Credit enhancement for fixed- or variable-rate tax-exempt bonds |
Loan proceeds available for acquisition/ rehabilitation (max 24 months); full proceeds available at completion and lease-up |
| Eligible Properties | To-be-built or substantially rehabilitated garden, mid-rise or high-rise multifamily properties with 4% LIHTC | Garden, mid-rise or high-rise multifamily properties with 4% LIHTC that meet affordability criteria and with 90% occupancy for 90 days | Garden, mid-rise or high-rise multifamily properties with 4% LIHTC undergoing moderate rehabilitation with tenants in place |
| Minimum Debt Coverage Ratio | Variable-rate: 1.20x1 Fixed-rate: 1.15x |
Variable-rate: 1.20x1 Fixed-rate: 1.15x |
Variable-rate: 1.20x1 Fixed-rate: 1.15x |
| Maximum Loan-to-Value | Variable-rate: 80% of adjusted value or 85% of market value Fixed-rate: 85% of adjusted value or 90% of market value (90% of adjusted value w/ HUD Risk Sharing) |
Variable-rate: 80% of adjusted value or 85% of market value Fixed-rate: 85% of adjusted or 90% of market value (90% of adjusted value w/ HUD Risk Sharing) |
Variable-rate: 80% of adjusted value or 85% of market value Fixed-rate: 85% of adjusted or 90% of market value (90% of adjusted value w/ HUD Risk Sharing) |
| Loan Term | Minimum of the remaining LIHTC compliance period. Maximum 30 years. | Minimum of the remaining LIHTC compliance period. Maximum 30 years. | Minimum of the remaining LIHTC compliance period. Maximum 30 years. |
| Maximum Amortization | 35 years | 35 years | 35 years |
| Prepayment Provisions | Fee Maintenance | Fee Maintenance | Fee Maintenance |
| Subordinate Financing | Available | Available | Available |
| Fees | Refundable: Funded – 1% of max loan amount Unfunded – 2% of proposed credit enhancement amount Non-refundable: Application fee, extension fee, legal fees |
Non-refundable: Application fee, extension fee, legal fees |
Non-refundable: Application fee, extension fee, legal fees |
| Application Fee | The greater of $3,000 or 0.1% of the maximum loan amount | The greater of $3,000 or 0.1% of the maximum loan amount | The greater of $3,000 or 0.1% of the maximum loan amount |
| Tax and Insurance Escrows | Required per TAH Guide on AllRegsTM | Required per TAH Guide on AllRegs | Required per TAH Guide on AllRegs |
1Variable-rate transaction with a swap of at least 10-years and meets Freddie Mac requirements is eligible for a minimum DCR of 1.15x.
Contact Us
- Download and print Freddie Mac's contact information
PDF Version
- Download the Bond Credit Enhancement – 4% LIHTC term sheet.
The information in this document is not a replacement or substitute for information found in the Delegated Underwriting for Targeted Affordable HousingSM Guide on AllRegs. Terms set forth herein are subject to change without notice.