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Constant Maturity Treasury (CMT)-indexed ARMs

Expand your product line and origination volume with Freddie Mac CMT-indexed ARMs

Adding Constant Maturity Treasury (CMT)-indexed adjustable-rate mortgages (ARMs) to your product line expands your origination volume opportunities. We offer many CMT-indexed ARMs with various rate and cap structures, including 1-year, 3-year and 5-year ARMs, and 3/1, 5/1, 7/1 and 10/1 ARMs.

CMT-indexed ARMs provide an attractive alternative for purchase money and refinance borrowers, allowing them to obtain home financing at initial rates that in many cases are below those for fixed-rate mortgages – a feature particularly attractive to move-up borrowers and those who do not intend to stay in their homes for long periods.

Plus, take advantage of efficiencies with Loan Product Advisor® automated underwriting technology to quickly and easily assess your CMT-indexed ARMs and streamline the process for your borrowers. 

Product Features

Property Type
  • 1- to 4-unit primary residences, including condos, PUDs and manufactured homes.
  • Second homes
  • 1- to 4-unit investment properties (with additional requirements)
Eligible Mortgage Products
  • 1-, 3- and5-year CMT-indexed ARMs
  • 3/1, 5/1, 7/1 and 10/1 CMT-indexed ARMs
  • Originate with Financed Permanent Buydown (5/1, 7/1 and 10/1 ARMs only), Home Possible Mortgages® (5/1, 7/1 and 10/1 ARMs only), Construction Conversion Mortgages and Renovation Mortgages.
  • 7/1 and 10/1 ARMs only for mortgages secured by manufactured homes.
  • 7/1 and 10/1 CMT-indexed ARMs only for investment property mortgages where the borrower owns more than one financed investment property.
  • 1-year, 3/1, and 3-year ARMs with margins of 400 basis points or more are not eligible for sale under flow purchase paths.
  • See Single-Family Seller/Servicer Guide (Guide) Chapter 4603 for super conforming ARM requirements.
Transaction Type
  • Purchase
  • No cash-out refinance
  • Cash-out refinance
Maximum LTV Ratios
Down Payment or Closing Costs
  • Secondary financing
  • Shared equity plans
  • Temporary subsidy buydowns
  • Loan Product Advisor Mortgages
  • Non-Loan Product Advisor Mortgages
  • Loan Product Advisor Caution Mortgages and non-Loan Product Advisor Mortgages must be manually underwritten per Guide Chapters 5100 through 5500.
  • Minimum Indicator Score of 620 unless otherwise specified in the Guide.
  • Maximum debt-to-income ratio of 45 percent for manually underwritten mortgages.
  • All mortgages must meet the risk class and/or minimum Indicator Score requirements in Guide Exhibit 25A, where applicable.
  • See Guide Section 4401.8 for additional underwriting requirements.
Execution Options
  • WAC ARM Cash
  • WAC ARM Guarantor
Credit Fees in Price
  • Credit Fees in Price may apply based on the individual characteristics of the mortgage. See Guide Exhibit 19 for details on applicable fees.
Special Delivery Requirements
  • See Guide Section 6302.7(b) for special delivery instructions for CMT-indexed ARMs.
Single-Family Seller/Servicer Guide
  • Refer to Guide Chapter 4401.

Lender Benefits

CMT-indexed ARMs help you:

  • Increase your origination volume and meet the needs of more homebuyers with multiple CMT-indexed ARMs with various rate and cap structures.  
  • Take advantage of the benefits of a cash or securities execution, based on your individual balance sheet and risk-based capital needs.
  • Commingle ARMs with different assumability periods to increase your competitive execution.

Benefits for Your Borrowers

CMT-indexed ARMs help your borrowers:

  • Discover more alternatives when looking for lower initial rates and monthly payments and who understand that their rate will increase.
  • Leverage flexible options for refinance or move-up borrowers who may qualify for larger loan amounts.
  • Take advantage of financial savings for borrowers who only plan to stay in their homes a short period of time.

For More Information

  • Review Guide Chapter 4401, Special Eligibility Requirement for ARMs.
  • 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 other Pricing Identifier Terms.

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