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SECONDARY MARKETS Freddie Mac to lower down payment hurdles for some loans in November

By Bonnie Sinnock September 03, 2021, 4:05 p.m. EDT 1 Min Read

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.

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