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No Cash-out Refinance Mortgages

Consolidate higher-rate seconds into one, lower-rate loan

Being competitive in today's mortgage market means offering your customers smart, affordable and convenient mortgage options designed to fit their changing needs. Offer your borrowers a no cash-out refinance mortgage to reduce their interest rate and monthly payment and consolidate higher-rate seconds into one, lower-rate mortgage.

A no cash-out refinance mortgage can lower a borrower's monthly payment, and all related closing costs, financing costs and prepaids/escrows can be rolled into the new loan amount.

Plus, when you use Loan Prospector® automated underwriting technology to evaluate no cash-out refinance mortgages, you'll approve more borrowers and streamline your process with less documentation.

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 ARMs
  • Super conforming mortgages. See Single-Family Seller/Servicer Guide (Guide) Chapter L33 for requirements.
Maximum LTV Ratios (without secondary financing)
  • Maximum LTV ratios must comply with Guide Section 23.4.1 for Loan Prospector and manually underwritten mortgages
  • For LTV/TLTV/HTLTV ratios for super conforming mortgages, see Guide Chapter L33
Down Payment or Closing Costs
  • All closing costs, financing costs and prepaids/escrows can be rolled into the new loan amount.
Eligibility/Underwriting
  • Loan Prospector Accept or A-minus
  • Non-Loan Prospector
  • New mortgage may include amounts used to pay off junior liens secured by the mortgaged premises that were used in their entirety to acquire the subject property, or must be subordinated or paid off from borrower funds.
  • A purchase transaction mortgage must be seasoned for at least 120 days in order to be refinanced as a “no cash-out” refinance mortgage.
  • Minimum Indicator Score of 620 for all mortgages 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.
  • Mortgage payment history and minimum income documentation in accordance with Loan Prospector credit risk/documentation class or Guide requirements.
  • 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 the Guide Section 37.4(b).
Execution Options
  • Servicing-retained 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
  • Postsettlement delivery fees may apply based on the individual characteristics of the mortgage. See Guide Exhibit 19 for details on applicable fees.
Special Delivery Requirements
  • Refer to Guide Section 17.21(b) for special delivery instructions for no cash-out refinance mortgages.
Single-Family Seller/Servicer Guide
  • Refer to Guide Section 24.5

Download a No Cash-out Refinance Mortgage fact sheet for more details.

Lender Benefits

No cash-out refinance mortgages help you:

  • Retain your current customer base and increase your origination volume with options to meet the needs of more borrowers.
  • Improve efficiencies using Loan Prospector.
  • Easily sell more mortgages to Freddie Mac.

Benefits for Your Borrowers

No cash-out refinance mortgages help your borrowers:

  • Lower their interest rate and payment.
  • Consolidate higher-rate seconds into one, lower-rate loan.
  • Eliminate upfront costs by rolling in all related closing costs, financing costs and prepaid items into the new loan amount. 
  • Eliminate mortgage insurance when the new appraisal or inspection report supports a higher value to calculate the new LTV ratio. 

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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