Freddie Mac Single-Family Seller/Servicer Guide Section 4302.4 — Borrower eligibility

Freddie Mac Single-Family Seller/Servicer Guide Section 4302.4 — Borrower eligibility

4302.4: Borrower eligibility (12/04/24) Borrower eligibility requirements for Refi Possible® Mortgages Topic Borrower eligibility requirements Borrower income ■ The Borrower’s qualifying income converted to an annual basis must not exceed 100% of the Area Median Income for the location of the Mortgaged Premises ■ To determine if the Borrower’s income exceeds the income limits, the Seller must rely on the income used to qualify the Borrower ■ For Loan Product Advisor Mortgages, Loan Product Advisor will use the income used to qualify the Borrower that was submitted to determine the income eligibility of the Mortgage ■ For non-Loan Product Advisor Mortgages, the Seller must use the Home Possible® Income & Property Eligibility tool. The Seller may not use other published Area Median Income versions (such as Area Median Incomes posted on https://www.huduser.gov/portal/home.html) to determine Mortgage or product eligibility. Change in Borrowers ■ The Borrower(s) obligated on the Note for the Refi Possible Mortgage must be the same as the Borrower(s) obligated on the Note for the Mortgage being refinanced, except that a Borrower obligated on the Note for the Mortgage being refinanced may be omitted from the Note for the Refi Possible Mortgage provided that: ❑ The Mortgage file contains evidence that the remaining Borrower has been making the Mortgage payments, including the payments for any secondary financing, for the most recent 12-month period from their own funds; or Freddie Mac Single-Family Seller/Servicer Guide Chapter 4302 As of 04/12/26 Page 4302-4 Borrower eligibility requirements for Refi Possible® Mortgages Topic Borrower eligibility requirements ❑ In the case of death, the Seller obtains and retains in the Mortgage file documentation of the Borrower’s death ■ In all cases, at least one Borrower from the Mortgage being refinanced must be retained 4302.5: Special eligibility and underwriting requirements for Refi Possible® (04/12/26) The following table describes the special requirements for Refi Possible® Mortgages applicable to Loan Product Advisor® Mortgages and Manually Underwritten Mortgages, except as specifically stated otherwise: Special eligibility and underwriting requirements for Refi Possible Mortgages Topic Special eligibility and underwriting requirements Underwriting path The Refi Possible Mortgage must be: ■ Submitted to Loan Product Advisor in accordance with the requirements of Chapter 5101, or ■ Manually underwritten in accordance with the requirements of the Guide except as specifically stated otherwise in this chapter. The Mortgage must be otherwise eligible for manual underwriting in accordance with the Guide. General eligibility requirements ■ The Refi Possible Mortgage must be a fixed-rate Mortgage ■ The Refi Possible Mortgage must not be: ❑ A Mortgage with a temporary interest rate buydown ❑ A super conforming Mortgage ❑ Originated pursuant to Section 50(a)(6) of Article XVI of the Texas Constitution. Refer to Section 4301.7 for additional information regarding Texas Equity Section 50(a)(6) Mortgages. Secondary financing An existing junior lien: ■ Must be subordinated to the Refi Possible Mortgage and must meet requirements for secondary financing in Chapter 4204 ■ May be refinanced simultaneously with the existing First Lien provided that: ❑ The UPB of the new junior lien is not more than the UPB, at the time of Freddie Mac Single-Family Seller/Servicer Guide Chapter 4302 As of 04/12/26 Page 4302-5 Special eligibility and underwriting requirements for Refi Possible Mortgages Topic Special eligibility and underwriting requirements payoff, of the junior lien being refinanced, ❑ There is no increase in the monthly Principal and Interest Payment of the junior lien No new subordinate financing is permitted, except to replace existing subordinate financing as stated above. Occupancy and property eligibility ■ The Refi Possible Mortgage must be secured by a one-unit Primary Residence ■ The Mortgaged Premises must be an attached or detached dwelling, a Manufactured Home, a unit in a Condominium Project or Planned Unit Development, or, if the Seller is permitted to deliver Cooperative Share Loans under its Purchase Documents, a Cooperative Unit ■ For Mortgages secured by Condominium Units or Cooperative Share Loans, the Seller is not required to evaluate if the Condominium or Cooperative Project meets the project eligibility requirements, provided that: ❑ The Seller represents and warrants that the project is not located in a Condominium Hotel or a cooperative hotel, houseboat project, timeshare project or project with segmented ownership; and ❑ The project has insurance that meets the applicable insurance requirements of Chapter 4703 Maximum loan-to- value (LTV)/total LTV (TLTV)/Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratios Property/transaction type Max LTV/TLTV/HTLTV ratios 1-unit other than Manufactured Homes 97%* Manufactured Homes 95% Mortgage with a non-occupying Borrower, whether or not secured by a Manufactured Home 95%* *A TLTV ratio up to 105% is permitted when the Mortgage is not secured by a Manufactured Home and secondary financing is an Affordable Second®. Borrower benefit The refinance transaction must result in both of the following: ■ A First Lien Mortgage interest rate reduction of at least 50 basis points AND ■ A reduction in the Borrower’s First Lien monthly principal, interest and mortgage insurance (if applicable) payment amount Freddie Mac Single-Family Seller/Servicer Guide Chapter 4302 As of 04/12/26 Page 4302-6 Special eligibility and underwriting requirements for Refi Possible Mortgages Topic Special eligibility and underwriting requirements Use of Mortgage proceeds The proceeds of the Refi Possible Mortgage must be used only to: ■ Pay off the first Mortgage ■ Pay related Closing Costs ■ Disburse cash to the Borrower not to exceed $250 In the event there are remaining proceeds from the Refi Possible Mortgage after the proceeds are applied as described above, the excess proceeds must be applied as a principal curtailment to the Refi Possible Mortgage and must be clearly reflected on the Settlement/Closing Disclosure Statement. Minimum Indicator Score There is no minimum Indicator Score required for eligibility of Refi Possible Mortgages; however, the Seller must identify and deliver an Indicator Score for all Refi Possible Mortgages in accordance with the requirements for identifying the Indicator Score in Section 5202.1. If the Seller determines that there is no usable Credit Score due to insufficient information or inaccurate information, the Mortgage is not eligible for sale to Freddie Mac. Credit assessment for manually underwritten Refi Possible Mortgages For Manually Underwritten Mortgages, the Seller does not need to perform a credit assessment of the Borrower in accordance with Chapter 5202 provided that: ■ In addition to meeting the payment history requirements for the Mortgage being refinanced, the Mortgage complies with the recovery time periods for reestablishment of credit following a significant derogatory event, as stated in Section 5202.1(d) ■ If the significant derogatory event was caused by extenuating circumstances, the Mortgage file must contain documentation attributing the cause of the financial difficulties to outside factors beyond the Borrower’s control Maximum debt payment-to- income (DTI) ratio ■ There is no maximum housing expense-to-income ratio ■ The total monthly DTI ratio must be less than or equal to 65%, including when a non-occupying Borrower is present Qualifying income In determining the Borrower’s qualifying income in accordance with Topic 5300, the Borrower’s base earnings must be considered for both non-fluctuating and fluctuating employment earnings before any additional employment earnings (e.g., bonus, commission, overtime, tips) may be considered. Income and employment documentation ■ The minimum documentation requirements in the table below apply to the referenced income types in lieu of the Streamlined Accept and Standard Documentation Level requirements stated for these income types in Freddie Mac Single-Family Seller/Servicer Guide Chapter 4302 As of 04/12/26 Page 4302-7 Special eligibility and underwriting requirements for Refi Possible Mortgages Topic Special eligibility and underwriting requirements requirements Topic 5300 Income type Minimum documentation requirements Base non-fluctuating employment (primary only) ■ Year-to-date (YTD) paystub documenting the YTD earnings, or ■ Written verification of employment (VOE) documenting the YTD earnings, and ■ 10-day pre-closing verification of employment Fluctuating hourly employment (primary only) Tip, bonus, overtime and commission income ■ YTD paystub documenting the YTD earnings and W-2 for the most recent calendar year, or ■ Written VOE documenting the YTD earnings and the earnings for the most recent calendar year and ■ 10-day pre-closing verification of employment Military income (basic pay, entitlements, Reserve and National Guard income) YTD Military Leave and Earnings Statement Self-employment ■ Complete federal individual and business income tax returns for the most recent one-year period, and ■ Verification of the current existence of the business through a third-party source obtained either no more than 120 calendar days prior to Note Date or after the Note Date but prior to the Delivery Date Alimony, child support or separate maintenance ■ Copy of legally binding documentation verifying the payor’s obligation (i.e., signed court order, final divorce decree, legally binding separation agreement, legally binding child support agreement or other legally binding documentation) for the previous one month, including the amount and the duration of the obligation Freddie Mac Single-Family Seller/Servicer Guide Chapter 4302 As of 04/12/26 Page 4302-8 Special eligibility and underwriting requirements for Refi Possible Mortgages Topic Special eligibility and underwriting requirements ■ Documentation to evidence receipt of the alimony, child support and/or separate maintenance payment for the most recent one month: ❑ Evidence that the payment was cashed or deposited into the Borrower’s depository account at a financial institution, or ❑ Evidence that the payment was transferred into a third-party money transfer application account owned by the Borrower, or ❑ Statement from a government agency (i.e., child support agency) reflecting the Borrower’s name and the amounts paid ■ All other income types must be documented in accordance with the Streamlined Accept and Standard Documentation Level requirements in Topic 5300 ■ All other documentation requirements, including Chapter 5302 and additional requirements for certain employment characteristics in Section 5303.1, apply Asset documentation requirements ■ When funds required for closing are more than $500, sufficient Borrower funds must be documented in accordance with Topic 5500, except that funds in a depository, securities or retirement account used for closing must be documented with one-month account statement or a direct account verification ■ When funds required for closing are $500 or less, verification of funds is not required Property valuation requirements ■ The Seller must obtain an appraisal with an interior and exterior inspection that meets the requirements of Topic 5600 unless the Last Feedback Certificate includes an automated collateral evaluation (ACE) offer stating that the Mortgage is eligible for collateral representation and warranty relief with ACE, or ACE+ PDR, and the Seller has accepted the offer. See Section 5602.3 for more information on ACE or Section 5602.4 for information on ACE+ PDR. ■ Refi Possible Mortgages secured by Manufactured Homes must meet the appraisal and valuation requirements of Chapter 5703 and are not eligible for ACE or ACE+ PDR ■ An appraisal cost offset credit will be provided if an appraisal was obtained for Freddie Mac Single-Family Seller/Servicer Guide Chapter 4302 As of 04/12/26 Page 4302-9 Special eligibility and underwriting requirements for Refi Possible Mortgages Topic Special eligibility and underwriting requirements the transaction and the loan is delivered without ACE or ACE+ PDR ■ The appraisal cost offset credit as described in Exhibit 19, Credit Fees, must be passed to the Borrower Negotiated provisions Unless specifically made applicable to Refi Possible Mortgages, negotiated underwriting provisions that impact the underwriting or eligibility requirements of Refi Possible Mortgages must not be used with these Mortgages.

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