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Affordable Seconds

A funding option for low- and moderate-income borrowers

Enhance your ability to originate Freddie Mac's Home Possible Mortgages.

Freddie Mac's Affordable Seconds is designed to help you meet the needs of borrowers who require flexible secondary financing options and sell affordable lending mortgage products that are supplemented by subsidized secondary financing. Affordable Seconds approved secondary financing must come from one of the following sources: any duly authorized authority or agency of the federal, state, local or municipal government, a nonprofit community or religious organization other than a credit union, the borrower's employer, or a regional Federal Home Loan Bank under one of its affordable housing programs.

Product Features

FeatureRequirements
Eligible Mortgage Products
  • Home Possible Mortgages
Maximum TLTV Ratios 
  • Multiple Affordable Seconds may be used, but within TLTV limits.
  • The maximum TLTV for a Home Possible Mortgage is 95 percent. 
Down Payment or Closing Costs
  • After meeting the minimum downpayment or borrower construction requirements for a loan, borrowers may use Affordable Seconds to supplement their down payment, closing and financing costs, prepaids and rehabilitation costs.
  • Home Possible Mortgages with Affordable Seconds can be submitted to Loan Prospector® with the Affordable Second amount entered in the Total Gift Fund field instead of the Subordinate Amount field, provided it does not require a payment before the Due Date of the 61st monthly payment under the Home Possible Mortgage and all other Affordable Seconds requirements are met (except for entering the amount as a gift, Sellers must include Affordable Seconds as secondary financing in all circumstances).
Eligibility/Underwriting
  • Low- and moderate-income borrowers who need secondary financing to qualify for a mortgage may use Affordable Seconds.
  • The Affordable Second must be provided by an agency under an established, ongoing, documented secondary financing or financial assistance program.
  • Interest rate on the Affordable Second may not exceed interest rate on the first mortgage.
  • Available through Loan Prospector.
Execution Options
  • Eligible execution options based on the individual characteristics of the mortgage.
  • Freddie Mac purchases the first mortgage, but not the Affordable Second.
Delivery Fees
  • Postsettlement delivery fees may apply based on the individual characteristics of the mortgage. See Single-Family Seller/Servicer Guide (Guide) Guide Exhibit 19 for details on applicable fees.
  • A secondary financing delivery fee will not be assessed on a Home Possible Mortgage with an Affordable Second, meeting the requirements of Guide Section 25.1.
Delivery Requirements
  • See Guide Section 17.18 (b) for special delivery instructions for Home Possible Mortgages with Affordable Seconds.
Single-Family Seller/Servicer Guide
  • Refer to Guide Section 25.1(g)

Download an Affordable Seconds fact sheet for more details.

Lender Benefits

Originating with Affordable Seconds helps you:

  • Strengthen your community investment by leveraging public funds to originate more loans.
  • Increase your Home Possible Mortgage originations for low- and moderate-income borrowers, including originating more Home Possible Mortgages.
  • Reduce your processing costs for secondary financing programs.
  • Support collaborations with public agencies and nonprofit organizations.

Benefits for Your Borrowers

Affordable Seconds helps your borrowers:

  • Increase their homeownership opportunities with a flexible secondary financing option.
  • Use various sources for a down payment, closing costs and financing costs, prepaids and rehabilitation costs.

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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