Need 80% loan to value on a non-recourse loan?

Need 80% loan to value on a non-recourse loan?

Market size matters for Freddie Mac.

Freddie Mac has some of the most attractive loan products for apartment loans in the market.  Under their Small Balance Program (“SBL”) you will find loans from $1 million to $7.5 million.  Freddie Mac limits the loan to value or loan to purchase depending on the size of the Market as defined by Freddie Mac. Market size is important if you need 80% loan on a non-recourse loan.  Fannie Mae has broader guidelines and may be able to provide higher loan dollars on properties in smaller markets.  Below are Freddie Mac market details:

Top Markets                      DSCR 1.20x                          80% Loan to Value/Acquisitions

Standard Markets            DSCR 1.25x                          80% Loan to Value/Acquisitions

Small Markets                   DSCR 1.30x                          75% For Acquisitions

70% Loan to Value for Refinancing

Very Small Markets         DSCR 1.40x                          75% For Acquisitions

70% Loan to Value for Refinancing

Also, loans over $6 million will have to have a minimum of a 1.25x DSCR (Debt Service Coverage Ratio).

What are the Freddie Mac definitions of the various Market Sizes?

Top Markets: Certain Counties (but not all) in the following MSAs: New York, Los Angeles, Chicago, Washington D.C., San Francisco, Miami, Boston, Seattle, San Diego, Minneapolis, Denver, Portland, San Jose, and Stamford, CT.

Standard Markets:  Typically greater than 105,000 rental units in the MSA.  This is not the population, but rather the number of actual rental units as determined by the Census Bureau.  Most of the MSAs of significant size including counties excluded from the Top Market list, Omaha, NE., Kansas City, MO/KS., St. Louis, MO, Denver, CO.

Small Markets: Typically between 30,000 and 105,000 rental units in the MSA (examples, Fayetteville, NC., Salem , OR., Green Bay, WI., Amarillo, TX., Topeka, KS.

Very Small Markets: Have less than 30,000 rental population.  Samples of Very Small Markets are Sioux Falls, SD., Albany, GA., Abilene, TX., Panama City, FL, Napa, CA., Joplin, MO.

Interested in apartment building loan?  Call an expert to see what loan product is best for you.

Mike Caffrey: 913.402.7077 or  [email protected]