Under its Senior Housing product, Freddie Mac finances rental housing that includes resident services for senior citizens who live in independent living, congregate care, and assisted living properties. Some properties with units set aside for skilled nursing or special needs may be eligible. A variety of financing options are available to meet any borrower’s needs, including conventional fixed-rate mortgages, standard and capped adjustable-rate mortgages, multifamily bond credit enhancement, negotiated transactions with multiple loan pools, and supplemental mortgages.

Advantages/Highlights

• Fixed- or variable-rate, balloon or fully amortizing financing
• Single asset or multiple assets, fee-managed or leased properties
• Fast execution
• Tax-exempt financing and bond credit enhancements

Eligibility

• Seniors living, independent living (IL)/congregate care, assisted living (AL), and properties with less than 20% of units set aside for skilled nursing or special needs, subject to special constraints
• Stabilized occupancy (90%) for three consecutive months and overall occupancy of at least 18 months
• Moderate rehabilitation may be permitted on a case-by-case basis
• No subordinate financing other than a second mortgage under the Freddie Mac Second Mortgage Program

Loan structure

• Minimum debt service coverage ratio (DSCR):
  –– 1.35x for IL/congregate care properties
  –– 1.45x for AL properties
  –– Partial and full interest or terms available
  –– 1.60x for properties with 20% or more skilled nursing care (1.80x for interest-only loans)
• Maximum loan-to-value (LTV): –– 75% for IL/congregate care and AL properties (65% for interest only loans)
  –– 65% for properties with 20% or more skilled nursing care (60% for interest-only loans)
  
• Loan terms:
  –– 5, 7, 10, 15, 20, and 25 year terms available for senior age-restricted apartments, independent living properties, assisted living facilities or assisted living facilities with 20% or more skilled nursing care
• Standard amortization is 25 years; loans with terms of 20 years or longer must be fully amortizing
• Interest rates established on a loan-by-loan basis in accordance with Freddie Mac’s risk-based pricing
• Non-recourse except for standard carve-out provisions

Requirements/Fees

• Appraisal, environmental assessment and physical needs assessment required
• Replacement reserve, tax, and insurance escrows required
• Financial statements must be reported on a semi-annual basis for independent living and congregate care properties and on a quarterly basis for assisted living properties or properties that have 20% or more skilled nursing units or beds
• Application fee (varies with size and deposits): –– Freddie Mac: Greater of $5,000 or 0.15% of loan amount

*Program terms are subject to change.