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Properties with Energy Conservation Improvements

GreenCHOICE MortgagesSM

Freddie Mac's solution for energy-efficient home improvements.

Servicing Success Program

Freddie Mac believes that reducing home utility costs places families in a better financial situation and helps preserve home affordability over time. Through our GreenCHOICE Mortgage offering, we are committed to facilitate the financing of energy efficient home improvements and energy efficient homes, helping more families across the United States attain and maintain home affordability.


Mortgage Features

Feature Requirements
Eligible Mortgages and Loan Purpose
  • Most of our eligible fixed-rate mortgages and ARMs*.
  • Purchase and "No cash-out" refinance transactions.
  • * GreenCHOICE Mortgages cannot be combined with Seller Converted Mortgages or Construction and Renovation Conversion Mortgages.
Eligible Property Types

1- to 4-unit property types, including condos and manufactured homes and new and existing properties.

  • Cooperative Units, if permitted under the Seller's Purchase Documents.
  • Manufactured homes, provided the improvements do not impact the structural integrity of the property.
Maximum LTV/TLTV/HTLTV Ratios
  • Standard LTV/TLTV/HTLTV ratios apply. See Guide Section 4203.4.
  • Up to 97% LTV or 105% TLTV for Home Possible® purchase transactions.
Maximum Available Energy Financing
  • 15% of the "as completed" value of the property
Basic Energy and Water Efficiency Improvements

Eligible basic energy and/or water efficiency improvements include the following:

  • Programmable thermostats.
  • Caulking or weather stripping.
  • Adding ceiling, wall or floor insulation.
  • Air sealing.
  • Air conditioning/heating replacement to high efficiency.
  • Solar water heaters.
  • Low-flow water fixtures.
  • High efficient refrigerators/freezers, water heaters and light bulbs.
  • Replacement of windows and doors.
Appraisal and Energy Reports
  • The Seller must obtain an interior and exterior inspection appraisal. See Guide Section 5601.12 (p) for appraisal specific requirements.
  • A completion report is required to verify completion of the improvements.
  • The Seller must obtain a copy of an energy report.  The following are acceptable energy reports.
    • A Home Energy Rating Systems (HERS) report
    • A Department of Energy Home Energy Score Report
    • Comparable rating report or audit  
  • For basic energy and/or water efficiency improvements with an aggregate cost less than or equal to $6,500, an energy report is not required.
Additional Underwriting Considerations
  • All energy and/or water efficiency improvements must be completed within 180 days of the note date.
  • An escrow account must be established by the Seller.
Credit Fees in Price
  • Freddie Mac will apply a $500 credit to Credit Fees in Price for GreenCHOICE Mortgages.

Additional Energy Conservation Flexibilities

Feature Requirements
Properties with Solar Panels
  • Freddie Mac will purchase mortgages secured by properties with solar panels provided they meet the eligibility requirements in the Guide Section 5601.2(c).
  • Payment for solar panels subject to a lease agreement, power purchase agreement, or similar type of agreement may be excluded from the monthly DTI ratio provided certain conditions are met. See Guide Section 5401.2(b)(iii).
Housing Expense-to-income and Debt-to-income Flexibilities
  • Higher housing expense-to-income ratio and debt-to-income ratio (up to 45%) may be permitted for manually underwritten mortgages with verification of cost-effective improvements.

    See Guide Sections 5401.1 and 5401.2 for additional details.
Property Accessed Clean Energy (PACE) Obligations
  • Borrowers may pay off a PACE or PACE-like obligation with proceeds from a cash-out refinance. See Guide Section 4301.8.
  • Borrowers may pay off a PACE obligation with the proceeds from a "no cash-out refinance," provided the PACE loan is paid in full and the mortgage being refinanced is owned or securitized by Freddie Mac. See Guide Section 4301.8.

Lender Benefits

Meet the needs of your borrowers by taking advantage of our Guide requirements:

  • Finance energy efficient improvements with any Guide product, property type and financing term up to 30 years to provide greater affordability for borrowers.
  • Offer more flexibility to your borrowers to finance energy efficient improvements.
  • Combine the flexibilities of Home Possible Mortgages to offer borrowers additional affordable financing opportunities.

Benefits for Your Borrowers

Our special considerations for energy conservation mortgages help your borrowers:

  • Enjoy the benefits of an energy efficient home, which may include lower utility costs and increased home comfort.
  • Finance the cost of energy improvements on their homes over the life of the loan.
  • Qualify for greater purchasing power despite higher debt-to-income and housing expense-to-income ratios for manually underwritten loans.

Get More Information

  • Review Guide Chapter 4606 for detailed requirement on GreenCHOICE Mortgages.
  • Call your Freddie Mac representative.
  • Visit the following pages for industry resources related to properties with energy efficient features:

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 other Pricing Identifier Terms.

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