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Cash-out Refinance Mortgages

Use cash out for a variety of purposes

Whether your borrowers are looking to receive cash out from the increased value of their home to use for debt consolidation, or for any other purpose, Freddie Mac's cash-out refinance mortgage options could be the solution.

Our cash-out refinance mortgage offers flexibility and variety so you can meet a diverse range of borrower needs: obtaining cash for home improvements, reducing a rate and monthly payment, paying off a purchase money junior lien used for any purpose, or paying off a leasehold interest. Plus, all related closing costs, financing costs and prepaid items can be rolled into the new loan amount, further maximizing your borrower's cash flow potential.

In addition, our special purpose cash-out refinance mortgage allows borrowers in special circumstances to use the proceeds of the refinance transaction to buy out the equity of a co-owner. With the special purpose cash-out refinance mortgage in your product line, you can now offer your borrowers another option to meet their specific needs.

Product Features

FeatureRequirements
Property Type
  • 1- to 4-unit primary residences, including condos, PUDs and manufactured homes.
  • Second homes
  • 1- to 4-unit investment properties
Eligible Mortgage Products
  • 15-, 20-, and 30-year fixed-rate mortgages
  • 5- and 7-year balloon/reset mortgages
  • Most standard ARMs
  • No seasoning requirement for eligible mortgages and inherited properties
  • Super conforming mortgages. See Single-Family Seller/Servicer Guide (Guide) Chapter L33 for requirements.
Maximum LTV Ratios for New Mortgage
  • Maximum LTV ratios must comply with Guide Section 23.4.1 for Loan Prospector® and manually underwritten mortgages
  • For TV/TLTV/HTLTV ratio requirements for super conforming mortgages, see Guide Chapter L.33.3
Eligibility/Underwriting
  • Loan Prospector
  • Non-Loan Prospector
  • Minimum Indicator Score of 620 unless otherwise specified in the Guide (Loan Prospector A-minus mortgages are exempt.)
  • All mortgages must meet the risk class and/or minimum Indicator Score requirements in Guide Exhibit 25A, where applicable.
  • The borrower must have been on the title to the subject property for at least six months prior to the note date of the cash-out refinance mortgage.
  • Refer to Guide Section 24.2 for requirements on continuity of borrower ownership or obligation.
  • The Seller must make the determination regarding borrower creditworthiness in accordance with the requirements of Guide Section 37.4(b)
  • New appraisal and inspection report required.
  • Special requirements apply for special purpose cash-out refinance mortgages. See Guide Section 24.7.
Down Payment or Closing Costs
  • All closing costs, financing costs and prepaids can be rolled into the new loan amount
Execution Options
  • Servicing-released Cash*
  • Servicing-retained 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 Fees
  • A cash-out refinance postsettlement delivery fee applies. Freddie Mac's cash-out refinance delivery fee is not billed for special purpose cash-out refinance mortgages delivered in accordance with the requirements of Guide Section 17.18.
  • See Guide Exhibit 19 for details on these fees and all other applicable fees or visit Exhibit 19.
Special Delivery Requirements
  • Refer to Guide Section 17.21(b) for special delivery instructions for cash-out refinance mortgages.
Single-Family Seller/Servicer Guide
  • Refer to Guide Sections 24.6 and 24.7.

Download a Cash-out Refinance Mortgage fact sheet for more details.

Lender Benefits

Cash-out refinance mortgages help you:

  • Meet the needs of more refinance borrowers looking to leverage their home equity for a variety of purposes.
  • Improve efficiencies using Loan Prospector.
  • Retain more of your customer base in refinance markets.
  • Meet the needs of borrowers with special circumstances using the special purpose cash-out refinance option.

Benefits for Your Borrowers

Cash-out refinance mortgages help your borrowers:

  • Receive cash out to consolidate debt or for any other purpose.
  • Pay off junior liens, including HELOCs. Pay off a purchase money junior lien or a leasehold interest, pay for home improvements or buy out the equity of an ex-spouse, joint heir or joint devisee.
  • Eliminate upfront costs by rolling all closing costs, financing costs and prepaid items into the new loan amount.

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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