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Going green can be a smart investment for multifamily owners and operators.

Fannie Mae Multifamily and Freddie Mac Multifamily both offer lending products that incentivize borrowers to improve their properties for eco-friendly purposes. Freddie Mac’s Green Advantage® and Fannie Mae’s Green Financing loan programs can provide better loan pricing and other benefits for acquisition and refinance loans for new and existing improvements.

Here’s how to qualify for the agencies’ green financing incentives.

Green building certifications

Fannie Mae and Freddie Mac provide incentives for properties with green building certifications.

Multifamily properties that acquire a Fannie Mae-recognized green building certification could receive a pricing incentive.

Requirements: Prior to rate lock, the multifamily property must possess a current green building certification from a Fannie Mae-recognized organization. The GSE recognizes over 35 types of green building certifications from 12 organizations ranging from Home Innovation Research Labs to the U.S. Department of Energy.

Benefits: Borrowers may receive a lower interest rate, which varies based on the type of Fannie Mae-certification obtained. Fannie Mae divides external green building certifications divided into Towards Zero, 1, 2 and 3 groups. Generally, the bigger the certification’s impact, the greater the preferential pricing. 

Apartment buildings that obtain a green building certification may qualify for discounted loan pricing.

Requirements: Borrowers must have a 10-year fixed-rate loan on properties with at least 40% of the property’s units affordable at workforce housing levels. Buildings must also have an industry-standard green building certification from one of nine Freddie Mac-recognized organizations.

Benefits: Multifamily borrowers with green building certifications from Freddie Mac–recognized organizations may receive discounted loan pricing. Borrowers can receive the rebate at the time of their loan purchase by Freddie Mac after meeting all obligations and requirements.

“Many sponsors already make energy-saving investments to reduce costs and meet resident expectations. Fannie Mae and Freddie Mac green financing can help these borrowers obtain additional price breaks and further increase their proceeds.” 

Fannie Mae and Freddie Mac energy-saving upgrades

Both GSEs offer financial incentives for multifamily properties looking to go green and apartment buildings that have already made energy-saving efforts.

Going green—and qualifying for preferential pricing through the Green Rewards program—starts with eco-friendly improvements.

Requirements: Properties with 12 months or more of stabilized residential occupancy are eligible. Borrowers must commit to making improvements projected to reduce the entire property’s annual energy and water consumption by at least 30%, including at least a 15% energy consumption reduction. Improvements must be installed within 12 months of loan origination.

Benefits: Fannie Mae’s Green Rewards program may cover the costs of an energy and water audit. The GSE may also offer preferential pricing and additional loan proceeds. 

Freddie Mac’s Green Assessment® is a property analysis that can show multifamily building owners and investors how they can benefit from energy- and water-saving property improvements.

Requirements: Multifamily borrowers must reduce their whole property’s energy or water consumption by 30%, with a minimum of 15% from energy, based on the Green Assessment.

A third-party consultant collects actual energy and water usage data before origination and throughout the loan term.

Benefits: Through the Green Up program, the multifamily borrower may receive better pricing and higher proceeds. Plus, Freddie Mac reimburses up to $4,000 of the Green Assessment’s cost when it acquires the loan.

The Freddie Mac Green Retrofits program is for market-rate and affordable multifamily building owners and investors who have already made eco-friendly improvements to their properties.

Requirements: Multifamily owners or operators must make energy and/or water efficiency improvements within the current or previous two calendar years from when they complete the Green Retrofits Certification. An affordability test is also required—eligible properties must have at least 20% of their units affordable at 60% Area Median Income.

Benefits: Borrowers can receive price breaks through the Freddie Mac Green Retrofits program.

Freddie Mac borrowers who don’t pursue other Green Advantage incentives may be eligible for a rebate.

Requirements: All borrowers on first mortgages, not including supplemental Value-Add, Lease-Up and Small Balance loans, are eligible. Multifamily properties must have more than 20 units and report their U.S. Environmental Protection Agency Energy Star® score. Freddie Mac encourages certification, but a minimum score or certification isn’t required.

Benefits: Multifamily borrowers can receive a $5,000 rebate by reporting their Energy Star score to Freddie Mac. At the time of their loan purchase—and after all obligations and requirements are met—they can receive the rebate.

“Assembling sufficient sources and funding components is one of the biggest challenges in affordable housing deals. When we see deals with a green building or energy saving element, our first step is to look for ways our client can benefit from Fannie Mae and Freddie Mac’s green financing programs.”

© 2023 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC. Visit for disclosures and disclaimers related to this content.

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