40-Year Fixed-Rate Mortgages
Expand your possibilities to serve rapidly growing markets
Our 40-year fixed-rate mortgages expand opportunity where you need it and take you deeper into new markets.
Along with a 40-year fixed-rate mortgage available for many of our Single-Family Seller/Servicer Guide products, we’ve extended 40-year options to our most popular affordable lending products – Home Possible® Mortgages, Alt 97® and A-minus Mortgages, a win for both you and your borrowers. This enhancement offers you more flexibility for affordable lending and Community Reinvestment Act (CRA) strategies, and opens up additional possibilities for first-time borrowers and other borrowers who are in need of more purchasing power to qualify to purchase a home in a high-cost housing area.
Collectively, the features of our 40-year fixed-rate products, combined with Freddie Mac technology advantages, competitive executions and 40-year fixed-rate seasoned mortgage sales, expand your possibilities to serve rapidly growing markets, with a secondary market outlet through Freddie Mac.
*You must have specific 40-year fixed-rate mortgage Required Spread in your Master Commitment before committing and delivering 40-year fixed-rate mortgages through the Fixed-rate Guarantor execution. Call your Freddie Mac representative to request a Master Commitment amendment.
Product Features
| Feature |
Requirements |
Property Type |
- 1-to 4-unit primary residences including condos, leaseholds and PUDs
- Second homes
- Investment properties
- Manufactured homes are not eligible
|
Eligible Mortgage Products |
- Home Possible® Mortgages
- Alt 97® Mortgage
- A-minus Mortgages
- Alternative Stated Income Mortgages
- Streamlined Refinance Mortgages
- Seasoned Mortgages
- Prepayment Penalty Mortgages
- Mortgages for Newly Constructed Homes
|
Transaction Type |
- Purchase
- No cash-out refinance
- Cash-out refinance
|
Maximum LTV Ratios |
-
Maximum LTV ratios must comply with Single-Family Seller/Servicer Guide (Guide) Section 23.4 for Loan Prospector® and manually underwritten 40-year fixed-rate mortgages
|
Eligibility/Underwriting |
- Loan Prospector Accept or Caution mortgages
- Non-Loan Prospector Mortgages
|
Execution Options |
- Fixed-rate Guarantor through the selling system
- Servicing-released Cash through the selling system
- Servicing-retained Cash through the selling system
|
Delivery Fees |
- A 40-year fixed-rate mortgage postsettlement delivery applies. Other delivery fees apply based on the individual characteristics of the mortgage. See Single-Family Seller/Servicer Guide Exhibit 19 [PDF 380K] for details on applicable fees.
|
Download a 40-year Fixed-rate Mortgage fact sheet [PDF 109K] for more details.
Lender Benefits
40-year fixed-rate mortgages allow you to:
- Diversify your product line and expand your origination volume by offering 40-year fixed-rate options to borrowers with a variety of needs and financial circumstances.
- Increase your market penetration and compete for CRA business with 40-year advantages extended to low down payment and affordable lending products.
- Sell competitively in the secondary market with ease, choosing a competitive cash or securities execution through Freddie Mac’s web-based selling system.
Benefits for Your Borrowers
For your borrowers, 40-year fixed-rate* mortgages:
- Lower their monthly amortization payment.
- Increase their purchasing power because of the extended maturity, resulting in greater affordability in high-cost housing areas.
- Are an appropriate fit for borrowers who fully understand that building equity in their homes will be slower with the reduced monthly payments and higher interest rate for the extended payment period.
*With 40-year fixed-rate mortgages, it continues to be important that borrowers have sufficient information on the terms of the mortgage product, and that the associated features, benefits and risks of the selected mortgage product are clearly explained to the borrower prior to the borrower making a product or payment choice.
For More Information
Training Opportunities
Visit The Learning Center for live and recorded web conferences, access to classroom-style workshops and self-study tools – all designed to help you stay competitive, serve more borrowers and make it easier to do business with us.
The information in this document is not a replacement or substitute for information found in the Single-Family Seller/Servicer Guide and/or the terms of your Master Agreement and/or Master Commitment.
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