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Mortgages with Secondary Financing

For conforming and super conforming mortgages, you can originate a first mortgage with an original loan amount up to the maximum eligible loan limit concurrently with a second lien home equity loan or line of credit*.

Product Features

Property Type
  • 1- to 4-unit primary residences
  • Second homes
  • 1- to 4-unit investment properties
Eligible Mortgage Products
  • First mortgage with the original loan amount up to the maximum eligible loan limit.
  • Fixed-rate mortgages
  • ARMs
  • Eligibility for secondary financing varies by mortgage product type.
  • Home Possible Mortgages with a TLTV ratio up to 95 percent when the secondary financing is an Affordable Second
  • Freddie Mac does not purchase the second mortgage.
Transaction Type
  • Purchase
  • Refinances
Maximum LTV Ratios
  • Base conforming mortgages must comply with the maximum LTV/TLTV/HTLTV ratio requirements in Single-Family Seller/Servicer Guide (Guide) Section 23.4.1 or the applicable requirement for the mortgage product type
  • Superconforming mortgages must comply with the maximum LTV/TLTV/HTLTV ratio requirements in Guide Section L33.3
  • Loan Prospector® mortgages and non-Loan Prospector mortgages
  • The terms of the secondary financing must:
    • Provide for regular monthly payments sufficient to meet the interest due; interest may not accrue
    • Be disclosed to the appraiser and mortgage insurer
  • Payment of the secondary financing must be included in the borrower's monthly housing
  • Secondary financing that is a HELOC must meet the requirements in Guide Section 25.1(d); Affordable Seconds must meet the requirements in Guide Section 25.1(g)
  • Refinance mortgages with junior liens must meet the requirements in Guide Section 25.2
  • Maturing date requirement: For financing other than HELOCs, the maturity date or amortization basis of the junior lien must not be less than five years after the note date of the first lien mortgage delivered to Freddie Mac, unless the junior lien is fully amortizing. Review Guide Section 25.1(b) for more details
Delivery Requirements
  • See Guide Section 17.42(b) for special delivery instruction for mortgages with secondary financing, including a closed-end subordinate lien and a HELOC. 
Delivery Fees
  • See Guide Exhibit 19 for details on applicable fees.
Single-Family Seller/Servicer Guide
  • Refer to Guide Chapter 25.

*There may be federal, state or local laws applicable to originators of this type, and Sellers should seek the advice of their legal counsel prior to implementation.

For More Information

  • Call your Freddie Mac representative.

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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