Freddie Mac Single-Family Seller/Servicer Guide 4501.7 — Loan-to-value (LTV)/total LTV (TLTV)/Home

Equity Line of Credit (HELOC) TLTV (HTLTV) ratios, Borrower contribution, reserves, sources of funds for Home Possible® Mortgages (08/03/26) This section contains requirements related to: ■ Loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratios, Borrower contribution ■ Reserves ■ Sources of funds

(a) LTV/ TLTV/HTLTV ratios, Borrower contribution (i) LTV/TLTV/HTLTV ratios The following requirements apply to purchase and “no cash-out” refinance transactions: Property type Maximum LTV/TLTV/HTLTV ratios Fixed-rate Mortgages 1-unit 97%* 2-unit 95%* 3- and 4-unit 95%* ARMs 1-unit 95%* 2-unit 95%* 3- and 4-unit 75%* Manufactured Home See Chapter 5703 *A TLTV ratio up to 105% is permitted when secondary financing is an Affordable Second. Note: See Section 4501.1(b) for additional information for Home Possible Mortgages that are ARMs, and for Affordable Seconds, see Section 4204.2. (ii) Other Guide provisions related to LTV/TLTV/HTLTV ratios for Home Possible Mortgages Topic Guide section Home Possible Mortgages with RHS Leveraged Seconds Section 4205.2 Value requirements applicable to Community Land Trust Mortgages Section 4502.5

(b) Home Possible Mortgages with non-occupying Borrowers Section 4501.4 Texas Equity Section 50(a)(6) Mortgages Section 4301.7 Value determination requirements applicable to CHOICERenovation® Mortgages Section 4607.4(d) Topic Guide section Maximum LTV/TLTV/HTLTV ratio requirements for and value calculation requirements for CHOICEHome® Mortgages Section 5703.12(g) (iii)Borrower contribution requirements For purchase transactions, the following requirements apply to the minimum contribution from Borrowers personal funds, as described in Section 4501.7(c)(i): Minimum contribution Property type Home Possible Mortgages with LTV, TLTV and HTLTV ratios ≤ 80% Home Possible Mortgages with LTV, TLTV or HTLTV ratios > 80% and ≤ 95% Home Possible Mortgages with LTV, TLTV or HTLTV ratios > 95% 1-unit None None None Manufactured Home None None N/A 2- to 4-unit None 3% of value 3% of value (b) Reserves For Loan Product Advisor® Mortgages, the Seller must verify all reserves required by Loan Product Advisor, as stated on the Feedback Certificate. For Manually Underwritten Mortgages, the Borrower must have the following minimum reserves, using the monthly payment amount as described in Section 5501.2 and must meet the asset eligibility and documentation requirements in Sections 5501.3 and 5501.4: ■ 1-unit: None required ■ 2- to 4-unit: Two months

(c) Sources of funds The following sources of funds are permitted and must meet the requirements in Sections 4501.7(c)(i) and (ii) below: Use Permitted sources of funds Minimum Borrower contribution Borrower personal funds Down Payment ■ Borrower personal funds ■ Other eligible sources of funds Paying down the principal balance of the Mortgage being refinanced for a “no cashout” refinance transaction ■ Borrower personal funds ■ Other eligible sources of funds Closing Costs ■ Borrower personal funds ■ Other eligible sources of funds ■ Flexible sources of funds Reserves ■ Borrower personal funds ■ Other eligible sources of funds (i) Borrower personal funds For Home Possible Mortgages, Borrower personal funds include: 1. Borrower personal funds as described in Section 5501.3 2. Cash on hand The following requirements must be met: ■ The Seller reasonably concludes and supports that the Borrower is a cash-basis individual ■ The cash on hand is not borrowed and could be saved by the Borrower The Mortgage file must contain the following documentation supporting the Seller’s conclusion: Documentation required to support the Seller’s conclusion Topic Documentation Positive residual income ■ Documentation confirming positive monthly residual income available for savings ■ Use of Exhibit 23, Monthly Budget and Residual Analysis Form, is optional; however, it reflects information that may be necessary to confirm positive residual income Recurring obligations customarily paid in cash Copies of six months’ cash receipts (e.g., rent or utility receipts) or other alternative documentation (e.g., direct verifications or wire transfers) meeting the requirements of Section 5202.1(b), to verify that recurring obligations, including revolving and installment debt, are customarily paid in cash Credit report ■ A credit report obtained at loan application meeting the requirements of Section 5203.1, showing no more than three Tradelines, and ■ An updated credit report obtained approximately one week before closing, showing no new accounts or no substantial increase in existing accounts that approximates, or exceeds, the amount of cash on hand provided by the Borrower Revolving accounts Copies of three months’ statements for any open revolving account showing cash advances are not the source of Borrower funds. Any cash advances must be explained and documented (i.e., a cash advance used in an emergency situation). Funds used to qualify the Borrower Evidence that all funds used to qualify the Borrower for the Mortgage transaction are deposited in a financial institution or are held in an institutional escrow account before closing The Mortgage file must have no indication that the Borrower typically uses checking, savings or similar accounts. (ii) Other eligible sources of funds For Home Possible Mortgages, other eligible sources of funds used to qualify the Borrower include: 1. Other eligible sources of funds as described in Section 5501.4 2. Gift or grant from the Seller as the originating lender, provided that a contribution of at least 3% of value (as described in Section 4203.1(a)) must come from Borrower personal funds and/or other eligible sources of funds. The gift or grant must not be funded through the Mortgage transaction, including differential pricing in rate, discount points, or fees for individual loans or across the Home Possible Mortgage offering. 3. Sweat equity for Home Possible Mortgages Sweat equity is credit for labor performed on the Mortgaged Premises and/or materials furnished for the Mortgaged Premises by the Borrower. This credit must be fully explained and documented. Any labor performed must be completed in a skillful and workmanlike manner to support the appraised value. A certification of completion (Form 442) must be obtained verifying the work has been completed. (A) Eligible repairs and improvements Sweat equity is an eligible source of funds in connection with the following repairs and improvements: ■ Repairs and improvements to be completed by the Borrower listed in the sales contract and included in the appraisal report ■ Repairs or improvements reflected on the appraisal report that are outstanding at the time of the appraisal (no credit for work completed prior to the original property inspection by the appraiser) (B) Determining the value of the sweat equity The value of the sweat equity that may be used as an eligible source of funds equals the value of the labor performed plus the value of the materials furnished, documented as follows: ■ Labor: Value must be estimated by the appraiser or a cost estimating service, and documented in the appraisal report or separately in the Mortgage file; and ■ Materials: Value must be estimated by the appraiser or a cost estimating service, or calculated using receipts from the purchase of materials. Estimates or costs as evidenced by receipts must be documented in the Mortgage file. (C) Maximum LTV and TLTV ratios For Home Possible Mortgages that use sweat equity as an eligible source of funds, the maximum LTV/TLTV ratios in Section 4501.7(a)(i) apply. (D) No cash out at closing If sweat equity is used as an eligible source of funds, the Borrower must not receive cash back at closing. Excess funds must result in a reduction of the principal balance on the Mortgage. (E) Sweat equity as a Down Payment When sweat equity is used as a source of funds for Down Payment, the full amount of the Borrower’s Down Payment can be in the form of sweat equity or a combination of sweat equity and Borrower personal funds as described in Sections 4501.7(c)(i) and 4501.7(c)(ii). (F) Affordable Seconds Sweat equity can be combined with an Affordable Second. (G) Special delivery requirements See Section 6302.14 for special delivery requirements for Home Possible Mortgages originated with sweat equity as a credit towards the Down Payment and/or Closing Costs. 4. Proceeds from an Affordable Second or other secondary financing When the TLTV ratio exceeds 97%, the secondary financing must be an Affordable Second. 5. Funds provided by an Agency that is affiliated with, under contract to or financed (directly or indirectly) by the Seller as the originating lender, when: ◼ The source of funds is an eligible source meeting all applicable Guide requirements (for example, a gift or grant from an Agency must meet the requirements in Section 5501.4); ◼ A contribution of at least 3% of value (as described in Section 4203.1(a)) is made from Borrower personal funds and/or other eligible sources of funds as described in this section; and ◼ The source of funds is not funded through the Mortgage transaction (including differential pricing in rate, discount points, or fees for individual loans or across the Home Possible Mortgage offering) (iii)Flexible sources of funds For Home Possible Mortgages, flexible sources of funds include: 1. Financing concessions: As described in Section 5501.6(b) meeting the applicable interested party contribution requirements of Section 5501.6 2. Lender credit: As described in Section 5501.7 and as documented on the Settlement/Disclosure Statement