Underwriting in Relation to the Freddie Mac SBL Program
During the underwriting process, a lender decides whether offering a loan to a borrower is a suitable risk, based on their estimated ability to repay. When examining a commercial loan application, lenders generally look at credit, capacity, and collateral– often referred to as the “three C’s” of underwriting.
In terms of credit, borrowers for the Optigo Small Balance Loan program will usually need to have a FICO credit score of at least 650. Capacity, which is defined by DSCR, varies between 1.20x (for amortizing loans in Top Markets) to 1.50x (for full-term interest-only loans in Small Markets). Since Small Balance Loans are non-recourse, the property itself is generally considered to be sufficient collateral for the loan.