Freddie Mac Optigo conventional multifamily loans

The published grid

Freddie Mac prints one leverage grid on its fixed-rate term sheet, and the term you pick is part of the sizing, not just the pricing.

Payment type	Maximum loan-to-value	Minimum amortizing coverage
Amortizing or partial interest-only	80% max LTV (7-year+), 75% (5 to under 7 years)1	1.25x min DCR1
Full-term interest-only	Full-term interest-only: 65% LTV (7 years or less), 70% (over 7 years)2	Same floor

The interest-only limits are cited from Freddie Mac’s Conventional Small sheet, which prints the same grid as the fixed-rate sheet. Two rules sit under the grid and change real deals:

1. Coverage is always tested on an amortizing payment. Freddie Mac tests DCR on interest-only loans using an amortizing payment, not the interest-only payment². Interest-only lowers your payment; it does not raise your proceeds on a coverage-bound loan.
2. Adjustments apply. Freddie Mac notes that the grid can be adjusted for the property, product or market. A tertiary market, an older asset or a heavy concentration of one employer can all cost leverage.

Sizing example: amortizing vs interest-only (illustration)

An illustration, not a quote: a stabilized property worth $30,000,000 with $1,900,000 of underwritten NOI, a ten-year fixed loan at an illustrative 6.20% note rate, 30-year amortization for the coverage test.

	Amortizing	Full-term interest-only
Loan-to-value cap	$30,000,000 x 80% = $24,000,000	$30,000,000 x 70% = $21,000,000
Coverage test (amortizing payment, constant 7.35%)	$1,900,000 / 1.25 / 7.35% = $20,681,000	Same: $20,681,000
Loan	$20,681,000	$20,681,000
Annual debt service	about $1,520,000	about $1,282,000 (interest only)

On this property, full-term interest-only costs nothing in proceeds, because coverage binds below both leverage caps, and it frees about $238,000 a year of cash flow. The trade is no principal paydown, so the balance at maturity is the full loan. That matters if values fall. Compare both structures on your numbers in the interest-only vs amortizing calculator.

Fixed or floating

	Fixed rate	Floating rate
Index	Treasury matched to term	priced over 30-day Average SOFR3
Prepayment	Yield maintenance until securitized, then 2-year lockout and defeasance; open final 90 days1	Option 1: locked out year 1, then 1%; open final 90 days3
Best for	Long holds, rate certainty	A sale or refinance expected within a few years
Watch	Defeasance cost on an early sale	Payment risk if SOFR rises; ask whether a rate cap is required

Today’s readings for both indexes are on the rates page.

Prepayment in practice

The securitization path drives the cost of leaving early:

• Before securitization: yield maintenance. Freddie Mac YM = greater of 1% or principal x (monthly note rate minus monthly Treasury rate) x a monthly present value factor⁴. Freddie Mac discounts the rate differential monthly (Fannie Mae's Form 6104.01 discounts annually)⁴, which makes Freddie’s premium slightly larger than Fannie Mae’s on identical inputs.
• After securitization: a lockout, then defeasance, where you buy a portfolio of government securities that replaces the loan’s payments. Defeasance cost depends on the gap between your note rate and Treasury yields at the time, plus legal, accounting and servicer fees.
• The window: No premium in the final 3 calendar months before scheduled maturity⁴.

If an early sale is likely, ask about yield maintenance without defeasance, which the term sheet offers on securitized loans at an added cost, and price it in the prepayment calculator.

Specialty executions

Property	Freddie Mac term	Note
Seniors housing	Independent living: 75% LTV at 1.30x (7-year+)5	skilled nursing capped at 20% of NOI5; quoted spreads held 75 days from signed application5
Student housing	80% LTV at 1.30x (7-year+); 75% for 5 to under 7 years6	$5 million minimum6
Manufactured housing	80% LTV / 1.25x DCR (7-year+)7	minimum 5 pad sites; loans of $1 million or more7; up to 25% of homes may be rentals7
Smaller loans	See Conventional Small	generally $2 million to $10 million2

Costs and timeline

• Application fee: Greater of $2,000 or 0.1% of the loan amount¹, plus the Optigo lender’s origination fee, which Freddie Mac does not publish.
• Third-party reports: appraisal, property condition, Phase I environmental and, where relevant, seismic and zoning reports.
• Escrows and reserves: tax, insurance and replacement reserves are generally required.
• Rate lock: Early rate lock typically 60 to 120 days until purchase; Index Lock available¹. An Index Lock lets you fix the Treasury piece early while the spread is set later.
• Timeline: Freddie Mac publishes none. The critical path is usually the appraisal and the Optigo lender’s credit approval, then Freddie Mac’s purchase review.

What Optigo lenders check, and what kills deals

Optigo lenders underwrite trailing income, a current rent roll tied to deposits, the sponsor’s experience, net worth and liquidity, and the property’s physical condition. The single-purpose-entity requirement means the borrower must hold only this property. The deals that fall out most often:

• Coverage failure at lock. Rates move between application and lock, and a loan sized at application can shrink. Lock early if the deal is tight.
• Refinance test failure on a high-leverage, low-coverage refinance; see the FAQ below.
• Ownership structure. Tenancy-in-common ownership is limited, and every tenant in common must be its own single-purpose entity.
• Lease-up not finished. A property still burning off concessions belongs in a bridge loan until it stabilizes.

For the head-to-head with Fannie Mae, see Fannie Mae vs Freddie Mac. For a non-agency alternative at similar size, compare CMBS and life company loans.