Construction to Permanent Mortgages
In support of Freddie Mac’s commitment to increase housing supply and reduce barriers in the homeownership journey, Freddie Mac offers Construction to Permanent Mortgages. This mortgage option provides borrowers with greater flexibility during the construction phase of their home build by offering a seamless transition from interim construction financing to permanent financing. Flexibilities include:
- Ability to combine construction mortgage with other low down payment mortgage products such as Home Possible®.
- Option for either a one-time or a two-time close transaction.
- Proceeds of the interim construction financing may be used for the cost of site preparation, including the removal of a manufactured home.
With expanded options to drive more loan volume, now is the time for Sellers to explore this market of opportunity. Learn more in the Single-Family Seller/Servicer Guide.
Who are Construction to Permanent Mortgages for?
- Borrowers who wish to combine construction mortgages with other low down payment mortgage products, such as Home Possible®.
- Borrowers seeking flexibility when securing permanent financing.
Disclaimer
The information on this page is not part of, and is not a replacement or substitute for, the requirements found in the Freddie Mac Single-Family Seller/Servicer Guide and your other Purchase Documents.
Product Features
- Credit Fees
See Guide Exhibit 19 for details on applicable Credit Fees in Price.
- Delivery Requirements
Refer to Guide Section 6302.28(b) for special delivery requirements for Construction to Permanent Mortgages. The ULDD Data Points and valid values that must be delivered are determined by both (1) the type of mortgage (i.e., Construction to Permanent Mortgage), and (2) the closing transaction structure.
- Eligibility/Underwriting
- Loan Product Advisor® (LPA®) Mortgages
- Non-Loan Product Advisor® (LPA®) Mortgages
- All mortgages must meet the risk class and/or minimum Indicator Score requirements in Exhibit 25, where applicable
- Eligible Mortgage Products
Includes, but not limited to:
- Fixed-rate mortgages
- ARMs eligible for sale to Freddie Mac
- Freddie Mac Home Possible® mortgages
- Super conforming mortgages
- Execution Options
- Servicing-released Cash
- Servicing-retained Cash
- Fixed-rate Guarantor
- WAC ARM Guarantor
- Construction Construction to Permanent Mortgages with a settlement date more 12 months after the effective date of permanent financing are not eligible for sale under MultiLender Swap
- Maximum LTV Ratios
The value used to determine LTV, TLTV, and HTLTV ratios for One-Time Close transactions is described in Guide Section 4602.2.
The value used to determine LTV, TLTV, and HTLTV ratios for Two-Time Close transactions is described in Guide Section 4203.1.
- Property Type/Eligible Properties
- A newly built or constructed 1- to 4-unit site-built home
- A newly purchased 1-unit manufactured home that never has been attached to a foundation
- Primary residence
- Investment property
- Second homes
- Transaction Type
- Purchase
- No cash-out refinances
- Cash-out refinances (Site-built only)
- If mortgage proceeds are used to replace Interim Construction Financing, the transaction must meet the requirements of Chapter 4602 of the Single-Family Seller/Servicer Guide (Guide)
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Additional Resources
Resources for Borrowers
Reaching and educating borrowers – and helping them find the right mortgage – is essential for your business. Freddie Mac provides an array of materials you can share with your clients and business prospects.