Additional Requirements for SBL Loans Under $1 Million
Unlike many types of multifamily financing, the Freddie Mac SBL program offers loans as low as $750,000. However, these ‘smaller’ Small Balance Loans come with additional requirements, due to the additional risk and expense they carry. Additional requirements include:
- Loans must be in a Top Market or Standard Market
- Eligible borrowers include:
- Previous Freddie Mac Multifamily borrowers
- Borrowers taking out multiple loans simultaneously
- Borrowers who will are likely to engage Freddie Mac for 2+ additional loans within the next 12 months
- Borrowers with significant multifamily experience in the area (2+ years local multifamily experience and 2+ multifamily properties owned)
- Loans that were initially approved for $1 million+ but were later constrained by property NOI or other factors
- Properties must underwrite a vacancy of at least 5% and an expense ratio of at least 30%
Additionally:
- 10-15 bps will be added loans in Top Markets, while 15-20 bps will be added to loans in Standard Markets
- Cash-out refinances for these loans are typically subject to stricter leverage requirements (LTV/DSCR)
- Seller/servicers may not market Small Balance Loans less than $1 million
- Freddie Mac generally requires 3 additional business days for commitments and inspections