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Mortgage Products
LTV Ratio, 1-Unit Properties
Transaction Type MI Coverage % % %
< 20 years
Standard 6% 12% 25% 25%
Custom n/a n/a 16% 18%
term > 20 years; ARMs; and
manufactured homes
Standard 12% 25% 25% 25%
Custom
6%
12% 16% 18%
Seller must obtain Freddie Mac’s approval to sell mortgages with annual or monthly premium lender-paid mortgage insurance to Freddie Mac. If custom MI is chosen, the custom MI fee applies
regardless of any cap on credit fees in price. See Guide Section 4701.1 for additional MI requirements and options including custom MI.
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Additional Requirements For 2- To 4-Unit Properties
• Minimum contribution from borrower personal funds for LTV/TLTV and HTLTV ratios:
• <= 80% – none
• >80% <= 95% – 3% of value
• >95% – not applicable
• Minimum borrower reserves required will be determined by Loan Product Advisor. If the mortgage is manually underwritten, two
months of reserves are required.
• Minimum indicator score for manually underwritten mortgages: 700.
• Collateral evaluation for 4-unit primary residences: Use Form 72, Small Residential Income Property Appraisal Report.
• Landlord education: For purchase transactions, at least one qualifying borrower must participate in a landlord education program
• Rental income from a 2- to 4-unit primary residence that meets requirements in Guide Chapter 5306 may be used as
qualifying income.
• Refer to the Guide for additional requirements.
Mortgage Insurance Requirements
The standard required or custom mortgage insurance (MI) coverage levels for Home Possible mortgages are as follows:
Temporary Subsidy Buydowns
• Allowed for mortgages secured by 1-2 unit properties that are not manufactured homes (See Guide Section 4204.4).
• If a mortgage with a temporary subsidy buydown plan is subject to secondary financing, including an Affordable Second, the
secondary financing must have a fixed interest rate.
Mortgage Credit C ates
•
5301.1 and 5305.2 are met.
• The amount used as qualifying income must be calculated as follows: (mortgage amount) x (note rate) x (MCC rate %) divided by 12
Homeownership Education
•
home ownership education.
• Homeownership education is also required for any transaction when the credit reputation for all borrowers is established using
only non credit payment references.
• Homeownership education must be completed prior to the note date.
before the note date. For refinances, landlord education is not required but is recommended. It must not be provided by an
interested party to the transaction, the originating lender or the mortgage seller. A certificate of completion must be retained in the
mortgage file.
Mortgage Credit Certificates (MCCs) may be considered as qualifying income, provided the requirements in Guide Sections
For a purchase transaction, if all occupying borrowers are first-time homebuyers, at least one occupying borrower must receive
Home Possible, fixed-rate, term
Home Possible, fixed-rate,