Investment Property Mortgages
Expand your mortgage offerings and cross-sell potential
With investment property mortgages, you'll expand your mortgage business options while boosting cross-sell opportunities for your other financial products. Originate 1- to 4-unit investment property mortgages with many Freddie Mac mortgage options – most ARMs, A-minus Mortgages, and more – to enhance your origination strategies and customize mortgages to your borrower's individual needs and financial strategies.
Use Loan Prospector® to quickly and easily assess investment property mortgages, and leverage the advantages of cash sales and securities executions through our web-based selling system.
Product Features
| Feature | Requirements |
| Property Type |
- 1- to 4-unit investment properties
- Properties in projects that meet the definition of Resort/Hotels per Guide Sections 42.3 and 42.10 are not eligible
|
| Eligible Mortgage Products |
- 15-, 20-, and 30-year fixed-rate mortgages
- Most ARMs
- A-minus mortgages (unless the borrower owns more than one financed investment property)
- Super conforming mortgages
|
| Transaction Type |
- Purchase
- No cash-out refinance
- Cash-out refinance
|
| Maximum LTV Ratios |
- LTV/TLTV/HTLTV ratios must comply with Single-Family Seller/Servicer Guide (Guide) Section 23.4.1
- See Guide Chapter L33.3 for maximum LTV/HTLTV/TLTV ratio requirements for super conforming mortgages
|
| Down Payment or Closing Costs |
- Borrower Funds must not include gifts as described in Guide Section 26.2.
|
| Eligibility/Underwriting |
- Loan Prospector (Accept or an A-minus) or manually underwritten mortgages
- Minimum Indicator Score of 620 unless otherwise specified in the Guide (Loan Prospector A-minus mortgages exempt)
- All mortgages must meet the risk class and/or minimum Indicator Score requirements in Guide Exhibit 25A.
- Maximum debt-to-income ratio of 45 percent for manually underwritten mortgages
- Additional eligibility requirements apply for borrowers who own more than one financed investment property. See Guide Section 22.22.1(c).
- Borrower may not be affiliated with or related to the builder, developer or property seller for newly constructed homes.
- Additional requirements apply for reserves, calculating monthly housing expense-to-income ratios, use of rental income in qualifying, rent loss insurance, and others.
- If rental income is being used to qualify the borrower:
- The borrower must demonstrate at least a two-year history of managing 1- to 4-unit investment properties.
- Aggregate negative rental income from all rental properties must be treated as an obligation and included in the debt-to-income ratio.
- The borrower must have rent loss insurance coverage on the investment property for at least six months gross monthly rent.
- Purchase of a new primary residence when the sale of the existing primary residence has not closed or is converting to a second home or investment property must meet the requirements in Guide Section 37.16.2.
|
| Execution Options |
- Servicing-retained and Servicing-released fixed-rate Cash*
- WAC ARM Cash
- Fixed-rate Guarantor
- WAC ARM Guarantor
- MultiLender Swap
* See our selling system availability matrix for a list of specific mortgages eligible for sale best efforts or mandatory, servicing released.
|
| Delivery Requirements |
- Refer to Guide Section 17.11(b) for special delivery instructions for investment property mortgages.
|
| Delivery Fees |
- Postsettlement delivery fees apply to investment property mortgages, including an Investment Property Mortgage delivery fee.
- See Guide Exhibit 19 for details on these fees and all other applicable fees.
|
| Single-Family Seller/Servicer Guide |
- Refer to Guide Section 22.22.1, Investment Property Mortgages.
- Refer to Guide Section 37.14 for qualifying income requirements.
|
Download an Investment Property Mortgage fact sheet for more details.
Lender Benefits
Investment Property Mortgages help you:
- Cross-sell other financial services you offer that appeal to customers who are seasoned investors.
- Expand your mortgage product line and diversify your mortgage business – helping you meet any borrower need.
Benefits for Your Borrowers
Investment Property Mortgages help your borrowers:
- Obtain flexible financing options for qualified investment-oriented borrowers.
- Leverage a variety of mortgage product types to further customize home financing to individual cash flows and financial situations.
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.
