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Small and Very Small Markets

June 6, 2019 By Janover Ventures

Small and Very Small Markets in Relation to the Freddie Mac SBL Program

The underwriting process for the Freddie Mac Small Balance Loan program divides cities across the country into Top Markets, Standard Markets, Small Markets, and Very Small Markets. Top Markets consist of the largest MSAs in the United States and therefore pose the least risk for Freddie Mac. In contrast, Small and Very Small Markets are composed of the smallest MSAs in the U.S. and are significantly riskier from an underwriting standpoint.

All cities and areas that are not specifically identified as Top Markets or Standard Markets are either classified as Small or Very Small Markets. Small Markets require that properties have a minimum debt service coverage ratio of 1.30x, while Very Small Markets require a minimum DSCR of 1.40x. Market tiers for the Freddie Mac SBL program were adjusted significantly in 2016, when nearly 50 Standard Markets were re-listed as Small Markets, in order to improve underwriting parameters and leverage for borrowers in the remaining Standard Markets.  A full list of SBL Market Tiers can be found here.

Filed Under: Freddie Mac SBL, Freddie Small Balance Loans, Glossary Tagged With: Freddie Mac Apartment Loans, Freddie Mac Multifamily, Freddie Mac Multifamily Loans, Freddie Mac Optigo, Freddie Mac SBL, Freddie Mac Small Balance Loans

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Information

Loan Facts

Terms, Qualifications, and Guidelines

Term Sheet

Interest Rates

Portfolio Loans

 

Knowledge Base

Frequently Asked Questions

Glossary

Application

Application Process

Third Party Reports

Appraisal Process

Environmental Assessments

Property Condition Reports