Freddie Mac on Nov. 15 will lower down payment requirements on primary residences for borrowers with incomes up to 80% of the area median who are taking out mortgages secured by 2-4 unit properties. Additionally, Freddie will ease guidelines for manufactured housing lending.
For 2-4 unit homes, maximum loan-to-value ratios have been limited to 85% unless second lien products that have been difficult to obtain in the private market were taken out, in which case the total LTV limit has been 95%. The change increases the limit to as high as 105% for borrowers getting down payment assistance from a subsidized source such as a state housing agency while ensuring that, at a minimum, borrowers must contribute funds equal to at least 3% of the loan amount. Borrowers without subsidized down payment assistance will have a maximum 95% LTV after the new requirements go into effect.
The pending changes to underwriting through Freddie’s Home Possible program are aimed at fulfilling the Biden administration’s recently announced affordable housing goals, which are aimed at making wealth-building through owner-occupied, 2-4 unit properties and low-cost manufactured homes more attainable.