GreenCHOICE Mortgages®
Freddie Mac believes that reducing home utility costs places families in a better financial situation and helps preserve home affordability over time.
Through our GreenCHOICE Mortgage® offering, we are committed to facilitate the financing of energy efficient home improvements and energy efficient homes, helping more families attain and maintain home affordability.
Finance energy efficient improvements with any mortgage product, property type and financing terms up to 30 years to provide greater affordability for borrowers, offer more flexibility and combine the flexibilities of Home Possible Mortgages to offer borrowers additional affordable financing opportunities.
Who are GreenCHOICE Mortgages® for?
- Borrowers who want to finance the cost of energy efficiency improvements.
- People hoping to enjoy the benefits of an energy efficient home, which may include lower utility costs.
- Borrowers who want to qualify for greater purchasing power despite higher debt-to-income and housing expense-to-income ratios for manually underwritten loans.
This Bulletin announces new opportunities and flexibilities for GreenCHOICE Mortgages, manufactured homes, our AIM offering and more. It also updates the Guide with the 2020 conforming loan limits.
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.
GreenCHOICE Mortgages® – Our Solution for Energy-Efficient Home Improvements
Product Features
From valuable training and networking events to advanced tools and applications that help you work smarter, Freddie Mac has the resources you need to expand into new markets and grow your revenues.
- Appraisal and Energy Reports
- The Seller must obtain an interior and exterior inspection appraisal. See Guide Section 5601.12 (p) for appraisal specific requirements.
- A completion report is required to verify completion of the improvements.
- The Seller must obtain a copy of an energy report. The following are acceptable energy reports.
- A Home Energy Rating Systems (HERS) report
- A Department of Energy Home Energy Score Report
- Comparable rating report or audit
- For basic energy and/or water efficiency improvements with an aggregate cost less than or equal to $6,500, an energy report is not required.
- Basic Energy and Water Efficiency Improvements
Eligible basic energy and/or water efficiency improvements include the following:
- Programmable thermostats.
- Caulking or weather stripping.
- Adding ceiling, wall or floor insulation.
- Air sealing.
- Air conditioning/heating replacement to high efficiency.
- Solar water heaters.
- Low-flow water fixtures.
- High efficient refrigerators/freezers, water heaters and light bulbs.
- Replacement of windows and doors.
- Eligible Mortgage Products
For GreenCHOICE Mortgages, that are no cash-out Refinance Mortgages, Sellers must deliver ULDD Data Point Related Loan Investor Type (Sort ID 222) of “FRE” and, if available, ULDD Data Point Related Investor Loan Identifier (Sort ID 221).
- Maximum Available Energy Financing
15% of the "as completed" value of the property
- Maximum LTV Ratios
Up to 97% LTV or 105% TLTV for Home Possible® purchase transactions. Standard LTV/TLTV/HTLTV ratios apply. See Guide Section 4203.4.
- Property Type/Eligible Properties
1- to 4-unit property types, including condos and manufactured homes and new and existing properties. Manufactured homes, provided the improvements do not impact the structural integrity of the property.
Cooperative Units, if permitted under the Seller's Purchase Documents.
Home Energy-Efficiency Assessments
- Going Green: Home Energy Assessments 101 - Get insights on home energy assessments which provide energy-saving recommendations for energy-efficient home improvements that enable homeowners to lower their utility bills and increase their homes’ value and marketability.
- HERS® Index - The RESNET Home Energy Rating System (HERS) Index is the standard by which a home’s energy efficiency is measured. The HERS Score is like a home’s MPG label, one number to tell you how energy efficient a home is.
- Home Energy Score™ - The U.S. Department of Energy's Home Energy Score™ (HES) provides homeowners, buyers, and renters valuable information about a home’s energy use and cost effective ways to save energy. Like a miles-per-gallon rating for a car, consumers can use the Home Energy Score to compare energy use across the housing market.
Lender Benefits
- Finance energy-efficient improvements with any Guide product, property type and financing term up to 30 years to provide greater affordability for borrowers.
- Offer more flexibility to your borrowers to finance energy-efficient improvements.
- Combine the flexibilities of Home Possible Mortgages to offer borrowers additional affordable financing opportunities.
Benefits for Your Borrowers
- Enjoy the benefits of an energy-efficient home, which may include lower utility costs and increased home comfort.
- Finance the cost of energy improvements on their homes over the life of the loan.
- Qualify for greater purchasing power despite higher debt-to-income and housing expense-to-income ratios for manually underwritten loans
Growing Your Business
From valuable training and networking events to advanced tools and applications that help you work smarter, Freddie Mac has the resources you need to expand into new markets and grow your revenues.
GreenCHOICE Mortgage® Requirements in the Single-Family Seller/Servicer Guide
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.