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.
- 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
- 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.
- 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.
- 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.
- Refer to Guide Section 17.11(b) for special delivery instructions for investment property mortgages.
- 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.
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
- Call your Freddie Mac representative.
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.