Rural Housing Service Section 502 Leveraged Seconds
Help meet the needs of low-income rural borrowers and increase homeownership opportunities in underserved markets through Rural Housing Service (RHS) Leveraged Seconds. Freddie Mac purchases Home Possible® Mortgages with an RHS Leveraged Second.
The Department of Agriculture's Section 502 Single-Family Leveraged Seconds Loan program is designed to meet the needs of low-income rural borrowers who have the necessary credit history, but may not have the income or down payment required for a conventional mortgage.
Use RHS Leveraged Seconds to meet the needs of low-income rural borrowers, increase homeownership opportunities in underserved markets and generate additional Community Reinvestment Act (CRA)-eligible volume.
Who are RHS Leveraged Seconds for?
- Low-income rural borrowers
- Borrowers in undeserved rural markets.
- People looking for accessible financing options.
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.
- Eligible Mortgage Products
- 30-year fixed-rate Home Possible Mortgages
- First lien
- The Home Possible Mortgage, combined with the RHS Leveraged Second, may exceed the purchase price under certain circumstances as agreed to by Freddie Mac and in accordance with the RHS program.
- HUD sets maximum total financing, but the Home Possible Mortgage may not exceed the Freddie Mac loan limits.
- Adjusted annual income must meet the requirements as defined by RHS. Contact RHS program offices for specific information on income limits.
- Execution Options
Fixed-rate Cash, fixed-rate Guarantor, and MultiLender Swap
- Credit Fees
Credit Fees in Price may apply based on the individual characteristics of the mortgage. See Guide Exhibit 19 for details on applicable fees.
- Delivery Requirements
See Guide Section 6302.14(b) for special delivery instructions for Home Possible Mortgages with RHS Leveraged Seconds.
- Property Type/Eligible Properties
1-unit owner-occupied primary residences including single-family dwellings, rehabilitated units and planned unit developments (PUDs).
Manufactured Homes in accordance with the Guide and RHS guidelines. Property location must meet the rural designation as defined by RHS.
- Maximum LTV Ratios
Maximum LTV ratio of the Home Possible Mortgage is 50 percent. Maximum LTV ratio, including the RHS Leveraged Second and all other secondary financing, is the lesser of 95 percent or the maximum allowed under the second loan regulations.
As an exception, the LTV ratio may exceed 50 percent and the TLTV ratio may exceed 100 percent (if permitted by the second loan regulations). Refer to the Guide Section 4205.2 for more details .
Home Possible Mortgages with RHS Leveraged Seconds available through Loan Product Advisor℠.
Mortgage insurance is not required on first mortgage. Additionally, reserves not required.
- Transaction Type
Purchase transaction only
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