Freddie Mac Single-Family Seller/Servicer Guide 4606.2 — Determination of value for the loan-to-value (LTV)/total loan-to-value (TLTV)/Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratio, underwriting requirements and qualifying ratios

Freddie Mac Single-Family Seller/Servicer Guide 4606.2 — Determination of value for the loan-to-value (LTV)/total loan-to-value (TLTV)/Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratio, underwriting requirements and qualifying ratios

Effective 2024-11-06 · Freddie Mac's stamp for this section

This section contains requirements related to: ■ Determining value ■ Underwriting ■ Qualifying ratios for Manually Underwritten Mortgages (a) Determining value The value used to calculate the loan-to-value (LTV) ratio, the total LTV (TLTV) ratio and the Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratio must be determined as follows: The value used to calculate the LTV/TLTV/HTLTV ratio Mortgage purpose Value Purchase transaction The value is the lesser of: ■ The “as completed” appraised value of the Mortgaged Premises; or ■ The total acquisition cost (i.e., the price paid for the Mortgaged Premises plus the cost of the eligible improvements) If the total acquisition cost is used, the Mortgage file must contain documentation of the costs used to calculate the total acquisition cost. The value used to calculate the LTV/TLTV/HTLTV ratio Mortgage purpose Value “No cash-out” refinance used to finance eligible improvements The value is the “as completed” appraised value of the Mortgaged Premises. “No cash-out” refinance used to pay an Existing Debt The value is the appraised value of the Mortgaged Premises. (b) Underwriting The Mortgage must be an Accept Mortgage or a Manually Underwritten Mortgage. (c) Qualifying ratios for Manually Underwritten Mortgages For Manually Underwritten Mortgages, see Section 5401.1(e)(ii)(B) for additional requirements for calculating the monthly housing expense-to-income ratio and the monthly debt payment-to-income ratio.

Source: Freddie Mac Single-Family Seller/Servicer Guide 4606.2 — Determination of value for the loan-to-value (LTV)/total loan-to-value (TLTV)/Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratio, underwriting requirements and qualifying ratios · source URL · snapshot e399c3dcaab28da0

Freddie Mac Single-Family Seller/Servicer Guide 4606.2 — Determination of value for the loan-to-value (LTV)/total loan-to-value (TLTV)/Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratio, underwriting requirements — PENDING VERSION, takes effect 2027-01-25

Not yet in force. This is the pending version of the section, which takes effect 2027-01-25. The other version on this page governs until then.

Effective 2027-01-25 · Freddie Mac's stamp for this section

This section contains requirements related to: ■ Determining “value” ■ Underwriting (a) Determining “value” For CHOICEReno eXPress® Mortgages, the “value” used to calculate the loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratio must be determined as follows: CHOICEReno eXPress Mortgages “value” used to calculate the LTV/TLTV/HTLTV ratio Mortgage purpose “Value” Purchase transaction The “value” is the lesser of: ■ The “as completed” appraised value of the Mortgaged Premises; or ■ The total acquisition cost (i.e., the price paid for the Mortgaged Premises plus the cost of the eligible renovations) If the total acquisition cost is used, the Mortgage file must contain documentation of the costs used to calculate the total acquisition cost. “No cash-out” refinance used to finance eligible renovations The “value” is the “as completed” appraised value of the Mortgaged Premises. “No cash-out” refinance used to pay an Existing Debt The “value” is the appraised value of the Mortgaged Premises. (b) Underwriting (i) Uniform Residential Loan Application The Seller must code the Loan Purpose on Form 65, Uniform Residential Loan Application, as either Purchase or Refinance (as applicable) and not as Construction or Construction-Permanent. (ii) Uniform Underwriting and Transmittal Summary The Seller must code the Loan Purpose on Form 1077, Uniform Underwriting and Transmittal Summary, as either Purchase or No Cash-Out Refinance (as applicable) and not as Home Improvement. The Seller must indicate in the Underwriter Comments the Mortgage is a CHOICEReno eXPress Mortgage. (iii)Methods of underwriting The Mortgage must be: ■ An Accept Mortgage, or ■ A Manually Underwritten Mortgage For Manually Underwritten Mortgages with energy efficient improvements, see Section 5401.1(e)(ii)(B) for additional requirements for calculating the monthly housing expenseto-income ratio and the monthly debt payment-to-income (DTI) ratio. (iv) Temporary rental payments for Mortgages with Settlement Dates before completion of eligible renovations For CHOICEReno eXPress Mortgages secured by Primary Residences, if the Borrower plans to rent another property as their principal domicile during the eligible renovations, the rental lease must be documented in the Mortgage file. The temporary rental payment for the Borrower’s principal domicile must be included in the calculation of the monthly DTI ratio if: ■ More than 10 payments remain on the lease term as of the Note Date, or ■ The rental lease has a renewal or extension option (v) Rental income from the subject property For a CHOICEReno eXPress Mortgage secured by a Primary Residence or an Investment Property, rental income from the unit(s), including ADU(s), that are included in the renovation project must not be used to qualify the Borrower.

Source: Freddie Mac Single-Family Seller/Servicer Guide 4606.2 — Determination of value for the loan-to-value (LTV)/total loan-to-value (TLTV)/Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratio, underwriting requirements · source URL · snapshot e399c3dcaab28da0