• Single-Family
  • Making Home Affordable Program
  • Underwrite and Process Loans
  • Sell and Deliver Loans
  • Mortgage Products
    • List of Products
    • Home Possible Mortgages
    • Product Training and Education
  • Service Loans
  • Doing SF Business with Freddie Mac
  • Forms and the Guide
  • The Learning Center
• Multifamily
• Debt Securities
• Mortgage Securities
• Vendors and Suppliers

Mortgages with Secondary FinancingCreate an edge in higher cost housing markets

For borrowers with strong credit histories who want flexible home financing at the lowest possible cost, you can package a Freddie Mac first conforming or super conforming mortgage¹ up to the maximum eligible loan limit with a second lien home equity loan or line of credit to provide the maximum potential home financing. This option may save borrowers thousands of dollars over the life of a loan.

With this combination, you'll provide home financing for borrowers who want maximum financing, but may not qualify for one larger loan amount. Your borrowers may get a better overall rate and lower monthly payments with a first mortgage combined with a second than they would for one mortgage covering the entire loan amount.

Use Loan Prospector® to assess these loans to streamline your underwriting process, and take advantage of both cash and guarantor execution options for the first mortgage.

Product Features

Feature	Requirements
Property Type	1- to 4-unit primary residences Second homes 1- to 4-unit investment properties
Eligible Mortgage Products	First mortgage of up to the maximum eligible loan limit. Fixed-rate mortgages ARMs Balloon/reset mortgages Eligibility for secondary financing varies by mortgage product type. Home Possible Mortgages with a TLTV up to 105% when the secondary financing is an Affordable Second Freddie Mac does not purchase the second mortgage.
Transaction Type	Purchase No cash-out refinances
Maximum LTV Ratios	Conforming mortgages must comply with the maximum LTV/TLTV/HTLTV ratio requirements in Guide Chapter 23.4.1 Superconforming mortgages must comply with the maximum LTV/TLTV/HTLTV ratio requirements in Guide Chapter L33.3
Eligibility/Underwriting	Loan Prospector Mortgages Non-Loan Prospector Mortgages Terms of secondary financing may provide for a variable interest rate if the interest rate of the first lien mortgage is fixed and both of the following conditions are met: The monthly payment must remain constant for each 12-month period over the term of the junior lien. The change in monthly payment at the end of each 12-month period cannot represent more than a one percent increase in interest rates.
Execution Options	Eligible executions for the first mortgage: Servicing-released Cash Servicing-retained Cash Fixed-rate Guarantor WAC ARM Guarantor MultiLender Swap See our selling system availability matrix for a list of specific fixed-rate mortgages eligible for sale best efforts or mandatory, servicing released.
Delivery Fees	A secondary financing postsettlement delivery fee applies, in addition to all other applicable delivery fees based on the individual characteristics of the mortgage. See Guide Exhibit 19 for details on applicable fees.
Single-Family Seller/Servicer Guide	Refer to Guide Chapter 25.

Download a Mortgages with Secondary Financing fact sheet for more details.

Lender Benefits

Mortgages with secondary financing allow you to:

• Price the loan using a blended rate (first and second rates combined) that may lower the single TLTV rate.
• Take advantage of an improved execution over higher TLTV loans.

Benefits for Your Borrowers

For your borrowers, mortgages with secondary financing help to:

• Lower their monthly payments.
• Benefit from possible tax relief gained from interest deductibility of the second trust payments after checking with their tax advisor.

For More Information

• Call your Freddie Mac representative.
• Print out a Mortgages with Secondary Financing fact sheet for more details.

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.

¹Note: This program may require that Sellers comply with various federal, state or local laws, and Sellers should seek the advice of their counsel prior to implementation.

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.