Freddie Mac Adjustable-Rate Mortgage

The Freddie Mac Adjustable-Rate Mortgage (ARM) product is ideal if you wish to take advantage of lower short-term rates with prepayment flexibility.

Key Benefits

Choice of indices: 1-month or 3-month Freddie Mac Reference Bills® index or a 1-month or 3-month LIBOR index.
Choice of 5-, 7-, or 10-year loan term; up to 80 percent LTV on loans with terms of 10 years or more.
Partial interest-only and full term interest-only available in some cases.
Choice of the Freddie Mac Embedded Interest Rate Cap or you may obtain your own cap coverage from a third-party provider. No cap necessary for loans less than 60% LTV¹.
Early spread lock for 60 or 120 days available.
Convertible to a new Freddie Mac fixed-rate or fixed-to-float mortgage at any time after lockout with streamlined underwriting.

Acquisition:

Term	Final ARM Loan-to-Value	Sizing Requirements: Amortizing Minimum DCR¹	Interest-Only (IO) Options			Minimum Term for Borrower-Provided Cap
Term	Final ARM Loan-to-Value	Sizing Requirements: Amortizing Minimum DCR¹	IO Available? (Y/N)	Maximum IO Period (if passes exit)	Sizing Requirements: IO Min. DCR	Minimum Term for Borrower-Provided Cap
5-Year	= 65% to = 70%	1.05x	N	NA	NA	3-year with escrow²
	> 60% to < 65%	1.05x	Y	Full-term	1.30x	3-year with escrow²
	= 60%	1.05x	Y	Full-term	1.30x	Cap not required
7-Year	= 70% to 75%	1.05x	Partial	2-year	Use amortizing DCR	4-year with escrow²
	= 65% to <70%	1.05x	Partial	2-year	Use amortizing DCR	4-year with escrow²
	> 60% to < 65%	1.05x	Y	Full-term	1.30x	4-year with escrow²
	= 60%	1.05x	Y	Full-term	1.30x	Cap not required
10-Year	= 75% to 80%	1.05x	Partial	2-year	Use amortizing DCR	10-year
	= 70% to <75%	1.05x	Partial	2-year	Use amortizing DCR	5-year with escrow²
	= 65% to <70%	1.05x	Partial	2-year	Use amortizing DCR	5-year with escrow²
	> 60% to < 65%	1.05x	Y	Full-term	1.30x	5-year with escrow²
	= 60%	1.05x	Y	Full-term	1.30x	Cap not required

No Cash-out Refinance:

Term	Final ARM Loan-to-Value	Sizing Requirements: Amortizing Minimum DCR¹	Interest-Only (IO) Options			Cap Provider: Borrower or Freddie (B/F)	Minimum Term for Borrower-Provided Cap
Term	Final ARM Loan-to-Value	Sizing Requirements: Amortizing Minimum DCR¹	IO Available? (Y/N)	Maximum IO Period (if passes exit)	Sizing Requirements: IO Min. DCR	Cap Provider: Borrower or Freddie (B/F)	Minimum Term for Borrower-Provided Cap
5-Year	> 60% to < 65%	1.05x	N	NA	NA	B/F	3-year with escrow²
5-Year	= 60%	1.05x	Y	Full-term	1.30x	B/F	Cap not required
7-Year	= 65% to 70%	1.05x	Partial	2-year	Use amortizing DCR	B/F	4-year with escrow²
	> 60% to < 65%	1.05x	Partial	2-year	Use amortizing DCR	B/F	4-year with escrow²
	= 60%	1.05x	Y	Full-term	1.30x	B/F	Cap not required
10-Year	= 70% to 75%	1.05x	Partial	2-year	Use amortizing DCR	B/F	10-year
	= 65% to <70%	1.05x	Partial	2-year	Use amortizing DCR	B/F	5-year with escrow²
	> 60% to < 65%	1.05x	Partial	2-year	Use amortizing DCR	B/F	5-year with escrow²
	= 60%	1.05x	Y	Full-term	1.30x	B/F	Cap not required

Cash-out Refinance and Supplemental:

Term	Final ARM Loan-to-Value	Sizing Requirements: Amortizing Minimum DCR¹	Interest-Only (IO) Options			Cap Provider: Borrower or Freddie (B/F)	Minimum Term for Borrower-Provided Cap
Term	Final ARM Loan-to-Value	Sizing Requirements: Amortizing Minimum DCR¹	IO Available? (Y/N)	Maximum IO Period (if passes exit)	Sizing Requirements: IO Min. DCR	Cap Provider: Borrower or Freddie (B/F)	Minimum Term for Borrower-Provided Cap
5-Year	> 60% to < 65%	1.10x	N	NA	NA	B/F	3-year with escrow²
5-Year	= 60%	1.10x	Y	Full-term	1.30x	B/F	Cap not required
7-Year	= 65% to 70%	1.10x	Partial	2-year	Use amortizing DCR	B/F	4-year with escrow²
	> 60% to < 65%	1.10x	Partial	2-year	Use amortizing DCR	B/F	4-year with escrow²
	= 60%	1.10x	Y	Full-term	1.30x	B/F	Cap not required
10-Year	= 70% to 75%	1.10x	Partial	2-year	Use amortizing DCR	B/F	10-year
	= 65% to <70%	1.10x	Partial	2-year	Use amortizing DCR	B/F	5-year with escrow²
	> 60% to < 65%	1.10x	Partial	2-year	Use amortizing DCR	B/F	5-year with escrow²
	= 60%	1.10x	Y	Full-term	1.30x	B/F	Cap not required

Prepayment Provisions

You can choose from four prepayment provisions when structuring Freddie Mac Standard, capped or uncapped ARMs. The fourth option is only available for a 10-year capped ARM. Each option offers no prepayment premium for the last 90 days of the loan term.

Option One
Year	Prepayment Premium
1	Locked out
2 & beyond	1%; waived if converted*

Option Two
Year	Prepayment Premium
1	3%
2	2%
3 & beyond	1%
> 4	Waived if converted*

Option Three
Year	Prepayment Premium
1	5%
2	4%
3	3%
4	2%
5 & beyond	1%
> 6	Waived if converted*

Option Four (10 yr capped ARM)
Year	Prepayment Premium
1	7%
2	6%
3	5%
4	4%
5	3%
6	2%
7 & beyond	1%
> 8	Waived if converted*

¹ For sizing purposes, use maximum note rate based on "strike" rate. For uncapped loans, use 7.0% as the maximum note rate (for sizing only). The underwriting maximum note rate for uncapped ARMs will be reviewed quarterly and is subject to change based on market conditions.
²Cap escrow calculated based upon projected cost of existing cap rate multiplied by 125% using the original "strike" rate. Escrow analyzed and resized each year during annual escrow analysis. Cap escrow may increase as a result of the annual analysis.

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The information in this document is not a replacement or substitute for information found in the Freddie Mac Multifamily Seller/Servicer Guide. Terms set forth herein are subject to change without notice.