Initial Interest Fixed-Rate MortgagesA fixed-rate mortgage with interest-only payments for an initial period

With Initial Interest^SM Fixed-rate Mortgages, you can meet the needs of qualified borrowers looking for financing options that provide them more flexibility with their financial resources.

Featuring interest-only monthly payments for a significant period of time, Initial Interest Fixed-rate Mortgages allow your borrowers to channel initial monthly payment savings toward other investment opportunities. Plus, they can make principal payments to reduce their monthly payments and start building equity in their homes any time during the initial interest-only period.

We offer these Initial Interest Fixed-rate Mortgage options for one-unit primary residences and second homes:

Initial Interest 10/20 Fixed-rate Mortgage – a 30-year fixed-rate mortgage with a 10-year initial interest-only period followed by a 20-year fully amortizing period.
Initial Interest 15/15 Fixed-rate Mortgage – a 30-year fixed-rate mortgage with a 15-year initial interest-only period followed by a 15-year fully amortizing period.

Initial Interest Fixed-rate Mortgages are assessed using Loan Prospector®, our automated underwriting service, to streamline the origination process for you and your borrowers. And, you can take advantage of our selling system for an easy, highly competitive cash or securities sale.

As with all Initial Interest Mortgages, Initial Interest Fixed-rate Mortgages are not for all borrowers, and should be offered appropriately only to borrowers who clearly understand and qualify for potential payment increases.

Product Features

Feature	Requirements
Property Type	1-unit primary residences, including condominiums and PUDs. Second homes Manufactured homes and co-ops are not eligible.
Eligible Mortgage Products	10/20 Initial Interest Fixed-rate Mortgage 15/15 Initial Interest Fixed-rate Mortgage Originate with Financed Permanent Buydown Mortgages and Mortgages for Newly Constructed Homes (Newly Built Home Mortgages – Site-built only). Super conforming mortgages. See Guide Chapter L33 for requirements.
Transaction Type	Purchase No cash-out refinance
Maximum LTV Ratios (without secondary financing)	Purchase and no cash-out refinance for 1-unit primary residence: 95% LTV See Guide Chapter L.33.3 for maximum LTV/TLTV/HTLTV ratio requirements for super conforming mortgages
Eligibility/Underwriting	Loan Prospector Accept The borrower is qualified using monthly housing expense that includes, but is not limited to, the principal and interest payment on the mortgage that is calculated as described in the Single-Family Seller/Servicer Guide (Guide) Section 37.15. For the purpose of qualifying the borrower, the principal and interest payment must be based on a fully amortizing payment schedule for the term of the mortgage. The borrower must be qualified using payments calculated using the Note Rate. Principal curtailments are permitted at any time. Loan Prospector's Property Inspection Alternative cannot be used.
Execution Options	Servicing-released Cash* Servicing-retained Cash Fixed-rate 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	A unique Initial Interest Mortgage postsettlement delivery fee will be assessed in addition to all other applicable Exhibit 19 postsettlement delivery fees. See Guide Exhibit 19 for details on these fees and all other applicable fees or visit Exhibit 19.
Special Delivery Requirements	You must represent and warrant that you have implemented processes and controls to ensure that borrowers with Initial Interest Mortgages received written disclosure addressing payment shock, negative amortization (if any), prepayment penalties and the cost of reduced documentation loans, as appropriate, and that such disclosure is provided in a timely manner as discussed in the Interagency Guidance. You must deliver all mortgage data required by Form 11 including Date of First P&I Payment, Monthly P&I Payment, Reference Code 0012 and Modification/Conversion Date.
Single-Family Seller/Servicer Guide	Refer to Guide Chapter J33.

Download an Initial Interest Fixed-Rate Mortgage fact sheet for more details.

Lender Benefits

Initial Interest Fixed-Rate Mortgages help you:

Meet the needs of borrowers looking for financing options that provide flexibility and who fully understand their payment will increase after the initial interest only period..
Offer interest-only monthly payments for a significant period of time.

Benefits for Your Borrowers

Initial Interest Fixed-Rate Mortgages help your borrowers:

Minimize financing costs for the short-term for borrowers who do not plan to stay in the house past the interest-only period.
Make principal curtailment payments during the interest-only period to increase their home equity and reduce their monthly payments

For More Information

Call your Freddie Mac representative.
Print out an Initial Interest Fixed-Rate Mortgage fact sheet
Get an overview of our entire Initial Interest product line.

Training Opportunities

Training Events Workshop Web Event
Mortgage Products: More Choices for More Borrowers - 1 day

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.