How To Apply For Freddie Mac Loan

Freddie Mac Student Housing Loans

Right now, there are nearly 20 million college students in the United States and many of them need high-quality, affordable housing. Fortunately, Freddie Mac Student Housing Loans help investors and developers meet this ever-expanding market need. These loans offer fixed-rate terms of between 5-10 years . Sample terms include:

• Size: $5 million – $100 million

• Use: Acquisitions or refinances

here to download our easy-to-read Freddie Mac Student Housing Loan term sheet.

Top Freddie Mac Loan Program For Home Buying And Refinancing

By Bryan Dornan

People who want to buy their own home have a variety of mortgage options available through Freddie Mac loan programs. Below is more information about the best Freddie Mac mortgage programs available for buyers and those who want to refinance. Freddie Mac mortgage rates continue to be competitively priced with housing affordability always being a top priority.

Low Down Payment Alternatives To Freddie Macs Home Possible Loan Program

The Home Possible loan isnt the only mortgage option for low-income homebuyers or those short on savings. In fact, there are several other mortgage programs that offer low down payments. In some cases, you might be able to avoid a down payment altogether.

If youre looking for an affordable mortgage program, you might consider one of these options:

Down payment and closing cost assistance programs can also help lower the upfront costs of buying a home. These programs vary by location, so check with your state housing agency to see what you might be eligible for.

Also Check: Usaa Pre Qualify

Fannie Mae And Freddie Mac Requirements

Fannie Mae and Freddie Mac have similar qualification requirements, which include:

• Debt-to-income ratio as high as 43% or 50% in some cases
• Down payment as low as 3%
• No recent major derogatory credit factors, such as foreclosure, short sale, bankruptcy or repossession
• Borrower income can be verified through three years of tax returns and W-2 forms, though exceptions may be permitted
• Loan limit for one-unit properties is $510,400 as of 2020, $765,600 in Alaska, Hawaii, Guam, and the U.S. Virgin Islands

While some of these requirements may seem like complex mortgage terminology, its simpler to understand with the right context. For example, to calculate the debt-to-income ratio, divide your total monthly debt payments by your total monthly income. Heres an example: If your total monthly debt payments add up to $3,000, and you have a monthly income of $9,000, your debt-to-income ratio would be 33%.

New And Improved Home Possible

Freddie Macs Home Possible program, instituted in 2015, increased the availability of conventional financing to buyers with small down payments. However, the minimum down payment was 5 percent for most applicants.

Only those who qualified for Home Possible Advantage could apply for a Freddie Mac 3% down loan. And that meant meeting income restrictions that depended on the local cost of housing. Danny Gardner, a senior vice president with Freddie Mac, said in a National Mortgage News interview that the program had some problems.

For example, a loan could be derailed by a lender finding extra income, for instance, from a spouse. This would push the applicant over the income limit.

That caused a level of complexity for lenders and consumers to understand those nuances, Gardner said. By having a more broad-based product where the metric is whether or not you are a first-time homebuyer makes those other if/then statements obsolete and lenders can be more confident promoting an option for borrowers.

Apply for HomeOne

Lenders are now accepting HomeOne loan applications. If youve been locked out of homeownership due to income restrictions or down payment requirements, now is the time to apply

You May Like: Usaa Home Loans Credit Score

I Dont Have Enough Cash For 3% Down Can I Still Qualify

Heres the great thing about the Freddie Mac Home Possible mortgage. You will need to put 3% down but the money doesnt have to come from your own cash savings if you are buying a single-family home that you will live in.

Freddie Mac does not require a minimum borrower contribution for homebuyers who are purchasing a single-family primary residence, such as a house, townhouse, condo, or manufactured home. That means that you can use funds from other sources for your down payment, including:

• Gift funds from friends or family
• Down payment assistance from an employer program
• Down payment assistance from a non-profit or charity
• Down payment assistance from a state or local housing authority
• Funds from a Freddie Mac Affordable Second loan (a secondary mortgage on your home that can be used toward down payment and closing costs
• Funds from an unsecured personal loan

What makes Freddie Mac Home Possible mortgages unique, however, is that you can use sweat equity toward your down payment.

Freddie Mac Choicerenovation Loan Vs Fha 203

The FHA 203 mortgage is a popular loan program that also allows borrowers to purchase a fixer upper and remodel it with a single mortgage. But there are a few differences between the loans.

• Down payment: Minimum down payment of 3.5% for FHA 203 rehab financing. Freddie requires a 3% minimum down payment when combined with a Home Possible loan otherwise, the minimum is 5%
• Consultants: The FHA 203 program requires borrowers to obtain the services of a 203k consultant. The consultant guides the homeowner through the construction process. Freddie, on the other hand, does not have this requirement
• Debt-to-income ratio: FHA has a maximum DTI of 43%, whereas DTI is determined by the individual lender with a CHOICERenovation loan

Read Also: How To Calculate Va Loan Amount

Freddie Mac Loans: 2022 Guide

IN THIS GUIDE

The Federal Home Loan Mortgage Corporation is a government-backed corporation that buys mortgages from certified lenders and packages these mortgages into mortgage-backed securities.

In this article, well explore key features of Freddie Mac loans, pros and cons, use cases, rates, and more!

Lets dive in.

Freddie Mac exists to improve credit flow via mortgages throughout the United States.

How?

These lenders use the funds from the sale of these mortgages to generate new loans to more homebuyers.

This exchange creates a healthy feedback loop that benefits both borrowers and the housing market writ large.

Eligible Income Sources For A Freddie Mac Home Possible Loan

Freddie Mac is flexible in how your down payment and your income are sourced. Income can be from traditional W-2 earnings or contracted 1099 earnings . Keep in mind: The income of all borrowers on the loan will be considered, so if you bring in a co-borrower, their income will be factored in as well. The income cap is for the households total combined income.

If you plan to have someone rent a room or part of the property from you, you can also use your future rental income to qualify you for the loan. To do this, the renter cannot be on the mortgage, must have lived with you for at least one year, and cannot be your spouse or domestic partner. Youll also need to provide documentation of paid rent for the last 12 months.

As for down payments, borrowers can use a variety of sources of funds, including cash, gifts from family, employer assistance programs, down payment assistance loans, and even sweat equity, which is when you physically improve the house and increase its value .

Also Check: Usaa Used Auto Rates

Freddie Mac Seniors Housing Loans

Freddie Mac Seniors Housing Loans are an ideal financing solution for senior healthcare properties, including assisted living, skilled nursing, and memory care facilities. These non-recourse, fully assumable loans provide terms of up to 30 years for fixed-rate financing and terms up to 10 years for adjustable-rate loans. Plus, Freddie Mac Seniors Housing Loans offer leverage up to 75%, with DSCRs as low as 1.30x. In general, nothing on market can compete, with the exception of HUD 232 financing, which is generally much less flexible and can be significantly more difficult to qualify for.

Terms include:

here to download our easy-to-read Freddie Mac Seniors Housing Loan term sheet.

What Is Freddie Macs Home Possible

SimpleMoneyLyfe » Mortgages » What Is Freddie Macs Home Possible®?

Disclaimer: This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Read our Disclaimer Policy for more information.

If youre looking for a mortgage on a budget, Freddie Macs Home Possible program may be your answer.

Home Possible works with low-income borrowers who can afford a small down payment and their monthly mortgage bill thanks to the programs looser lending requirements.

Read Also: What Does Unsubsidized Loan Mean

Where Can You Find Freddie Mac Mortgage Rates

Freddie Mac publishes U.S. mortgage rates in its Primary Mortgage Market Survey . This weekly report averages the interest rates from participating lenders on 30-year fixed, 15-year fixed and 5/1 adjustable-rate mortgages. The survey reflects market trends and not specific Freddie Mac mortgage rates.

What Is A Freddie Mac Loan

As a GSE, Freddie Mac is only allowed to purchase what is known as conforming loans. Freddie Mac sets its own guidelines for the loans it will buy from lenders. Lenders who sell loans to Freddie Mac must carefully follow the guidelines to insure the loan is saleable to Freddie Mac. The number one factor is making sure the loan doesnt exceed the allowable loan limit. For most areas of the country, the limit is $417,000. However, certain areas are designated as high cost metropolitan regions and have higher loan limits of up to $625,500.

You May Like: Usaa Personal Loan Credit Requirements

Summary & Final Thoughts

No one-size-fits-all solution exists when it comes to financing your home or commercial real estate property.

Thats why Freddie Mac offers different loan programs that make it possible for borrowers from various situations to purchase their first home or investment property.

Its important to remember that Freddie Mac does not make loans. Instead, they purchase qualified loans from lenders. This transaction provides funding for banks. The banks, in turn, make more loans and drive down interest rates for borrowers.

Freddie Mac loans come with a certain set of guidelinesthese guidelines classify Freddie Mac loans as conventional, conforming loans.

Conventional loans can either be fixed- or adjustable-rate loans, and they can be used to finance almost any type of property, from a first home to an apartment complex.

To qualify for Freddie Mac loans, its important that you present

• Good credit score

Why Do Fannie Mae And Freddie Mac Loans Exist

Fannie Mae and Freddie Mac were both created by Congress. And while they don’t lend directly to homebuyers, they still play an important role in financing home loans. By purchasing mortgages and selling them to investors, Fannie Mae and Freddie Mac free up cash for banks, mortgage companies and other lenders to finance home purchases. This also helps keep down interest rates and stabilizes the lending market.

Fannie Mae was established in 1938 and Freddie Mac in 1970. They’re structured so that the federal government guarantees they won’t default on their debt.

Amid the COVID-19 pandemic, American homeowners with Fannie Mae or Freddie Mac loans have been able to take advantage of potential financial relief if they were struggling to make their mortgage payments. Relief options include reduction of monthly payments or creation of a repayment plan.

Recommended Reading: Can You Refinance With An Fha Loan

If You Want To Finance The Cost Of Energy Efficiency Improvements

Good option: Freddie Mac GreenCHOICE® mortgage

Energy Efficient Mortgages are specifically designed to help homebuyers purchase an energy-efficient home or finance the cost of energy improvements to a home over the life of the loan. The GreenCHOICE mortgage can be applied to a new home purchase or a no cash-out refinance to cover basic energy efficiency improvements, including:

• Air conditioning/heating replacement to high efficiency
• Solar water heaters
• High-efficiency refrigerators/freezers, water heaters and light bulbs
• And more

Is A Choicerenovation Loan Right For You

Many borrowers would like to buy and fix up a new home, but traditionally its taken two loans and two closings to finance such deals.

Theres one closing for acquisition financing. Then, later, theres a second closing for such options as a cash-out refinance, a second loan, a home equity loan, or a home equity line-of-credit to pay for renovations.

In all situations, such loans can require a full-blown closing, and that can mean big costs for such things as legal fees, title insurance, and taxes.

Freddie Macs CHOICERenovation loan program eliminates the fuss and expense of closing on two loans.

Instead, it allows borrowers to buy a home and make needed renovations all with a single mortgage loan.

Also Check: Upstart Can I Get A Second Loan

Where To Turn For Help

Every year, many state, county and city governments provide financial assistance for people in their communities who are well-qualified and ready for homeownership. Requirements vary, but if you’re eligible you could receive down payment assistance ranging from a few thousand dollars to larger amounts, depending on your needs, your qualifications, and where the home is located.

Additionally, many programs specifically benefit veterans, Native Americans, and workers employed in education, health care, law enforcement, and firefighting are available.

What Is Freddie Mac Home Possible

The Freddie Mac Home Possible loan is a conventional mortgage that allows you to buy a home with as little as 3% down. It was created to make homeownership accessible to more people, so borrowers must earn at or below the income limits for their area.

Freddie Mac Home Possible mortgages offer homebuyers flexibility. You can use a variety of sources to cover your down payment and closing costs, so you may qualify even if you have limited cash on hand to put toward the home.

And you can use roommate income on your application, in addition to any other incoming sources you use to qualify. That can boost your chances of being approved, as well as potentially increase the amount you can borrow .

To qualify, the roommate must have paid you rent for at least nine out of the past 12 months, and they must plan to live with you in your new property

Don’t Miss: Usaa Loan Approval

Freddie Mac Announces Redesigned Us Residential Mortgage Loan Application

MCLEAN, VA– – Freddie Mac today announced a redesigned standard application for borrowers to use when they apply for a single-family mortgage. The redesigned Uniform Residential Loan Application was developed jointly with Fannie Mae under the direction of the Federal Housing Finance Agency . This marks the first substantial revision to the URLA in more than 20 years.

“The redesigned URLA allows much greater flexibility than in the past by acknowledging that not all loan applications are the same,” said Samuel E. Oliver III, Vice President of Single Family Business Transformation Management at Freddie Mac. “It does a great job of capturing new data that aligns with the needs of Freddie Mac, Fannie Mae, and other agencies, eliminating irrelevant underwriting data fields, and displaying information in an easier-to-read format.”

In addition to a reorganized layout and simplified terminology, the new URLA includes data fields such as mobile phone number, email address, and military service.

Lenders may begin using the redesigned URLA on Jan. 1, 2018, for single-family loans submitted to Freddie Mac and Fannie Mae as well as mortgages that are federally insured by the Federal Housing Administration , the Veterans Administration , or the U.S. Department of Agriculture’s Rural Housing Service .

Media Room

How To Use Sweat Equity Toward Your Down Payment

Sweat equity refers to work you do to improve the condition of the home. That includes:

• Labor on repairs to the home
• Cost of materials used in repairs to the home

In order for your sweat equity to qualify, you will need:

• An appraiser or cost-estimator to determine the value of the labor and submit a formal estimate to your lender
• Proof of the value of the materials youve purchased, either via receipts or an estimate from an appraiser or cost-estimator

Sweat equity credit only applies only to work completed based on the appraisal report. Any improvements made to the home prior to the seller accepting your offer, or prior to the appraisal, cannot be included in the sweat equity contribution.

Additionally, to be eligible, the repair work must be noted in the appraisal report. Typically, the sweat equity work should be based on issues in the home that need to be repaired before the lender can approve the loan. The repairs must also be spelled out in the sale contract for the home and the appraisal report.

Recommended Reading: How Much Loan Officer Commission

Relief For Homeowners And Renters

Were extending help to homeowners and renters facing financial hardships as a result of COVID-19.

Learn more about COVID-19 relief options: