Freddie Mac Single-Family Seller/Servicer Guide Section 5501.4 — Other sources of funds

Freddie Mac Single-Family Seller/Servicer Guide Section 5501.4 — Other sources of funds

5501.4: Other sources of funds (05/07/25) Sources of funds eligible to be used to qualify the Borrower other than those in Section 5501.3 and the eligibility and documentation requirements are described in the tables below. These requirements apply to all funds used to qualify the Borrower, including reserves. Any limitations on the use of an asset type are specified in the tables. Note: See Section 4501.7(c)(ii) for other eligible sources of funds for Home Possible® Mortgages and Section 4504.7(c)(ii) for other eligible sources of funds for HeritageOne® Mortgages. This section contains requirements related to: ■ Gift or grant funds ■ Individual Development Account (IDA) – Agency matching funds subject to Recapture ■ Proceeds from an unsecured loan that is an Employer Assisted Homeownership (EAH) Benefit (a) Gift or grant funds The following table contains eligibility and documentation requirements for gift or grant funds: Gift or grant funds Asset type and eligibility requirements Documentation requirements 1. Gift funds or a gift of equity Gift funds or a gift of equity are an eligible source of funds for a Mortgage secured by a Primary Residence or second home provided that funds do not have to be repaid and the donor is one of the following: ■ A Related Person ■ A trust established by a Related Person Gift letter and evidence of receipt of the gift funds. Gift letter must: ■ Be signed by the donor. When the gift is provided by a trust or an estate, the gift letter must be signed by the trustee or the authorized representative of the estate, as applicable. ■ State the donor’s name and that the funds are given by a Related Person, a trust Freddie Mac Single-Family Seller/Servicer Guide Chapter 5501 As of 03/04/26 Page 5501-24 Gift or grant funds Asset type and eligibility requirements Documentation requirements ■ The estate of a Related Person When a Mortgage is secured by a second home and the loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit (HELOC) (HTLTV) ratio is greater than 80%, the gift is permitted only if the Borrower has made a Down Payment of at least 5% from Borrower personal funds as described in Section 5501.3. Gift funds must be transferred directly from the donor’s account in a financial institution to the Borrower’s account or to the settlement or closing agent. Exception: For earnest money deposits, the donor may also provide the gift funds directly to a builder or real estate agent. Note: Gift funds or gift of equity are not an eligible source of funds for Investment Property Mortgages. established by a Related Person or the estate of a Related Person, as applicable ■ Include the donor’s mailing address and telephone number. When the donor is a trust or an estate, provide the mailing address and telephone number of the trustee or authorized representative, as applicable. ■ State the actual or the maximum amount of the gift funds or gift of equity ■ Establish that the gift funds or gift of equity are a gift that does not have to be repaid Receipt of gift funds must be documented by one of the following: ■ Transfer of funds from the donor’s account in a financial institution to the Borrower’s account (e.g., copies of bank statements from both the donor and the Borrower’s accounts, a copy of a canceled gift check or a copy of a donor’s withdrawal slip and the Borrower’s deposit slip) ■ Transfer of the funds from the donor’s account in a financial institution to the settlement or closing agent (e.g., a copy of a cashier’s check or wire transfer confirmation) ■ For an earnest money deposit paid by the donor directly to the builder or real estate agent, transfer of funds from the donor’s account in a financial institution to the earnest money deposit holder (e.g., a copy of a canceled gift check, a copy of a cashier’s check or wire transfer confirmation) ■ Funds transferred using a third-party money transfer application or service Freddie Mac Single-Family Seller/Servicer Guide Chapter 5501 As of 03/04/26 Page 5501-25 Gift or grant funds Asset type and eligibility requirements Documentation requirements are acceptable only when the documentation in the Mortgage file evidences that the funds were transferred using the application or service directly from the donor’s bank account to the Borrower’s bank account or to the settlement or closing agent ■ A gift of equity must be reflected on the Settlement/Closing Disclosure Statement 2. Gift funds received as a wedding gift Gift funds received as a wedding gift from unrelated persons and/or Related Persons are an eligible source of funds for a Mortgage secured by Primary Residence. The gift funds must be on deposit in the Borrower’s depository account within 90 days of the date of the marriage license or certificate. All of the following: ■ The marriage license or certificate ■ A verification of the gift funds in the Borrower’s depository account 3. Gift funds received as a graduation gift Gift funds received as a graduation gift from unrelated persons and/or Related Persons are an eligible source of funds for a Mortgage secured by a Primary Residence. The gift funds must be on deposit in the Borrower’s depository account within 90 days of the date of graduation. All of the following: ■ Evidence of graduation from an educational institution (e.g., diploma or transcripts) that supports the date of graduation ■ A verification of the gift funds in the Borrower’s depository account 4. A gift or grant from an Agency Documentation supporting a gift or grant from an Agency. Examples of acceptable documentation include copies of grant Freddie Mac Single-Family Seller/Servicer Guide Chapter 5501 As of 03/04/26 Page 5501-26 Gift or grant funds Asset type and eligibility requirements Documentation requirements A gift or grant from an Agency that does not have to be repaid is an eligible source of funds provided that: ■ The gift or grant is given pursuant to an established program ■ The Agency is not an interested party (as described in Section 5501.6) ■ The funds were not obtained from an interested party either directly or through a third party; and ■ With respect to the subject Mortgage, the Agency must not: ❑ Be the Seller or have participated in any aspect of the Mortgage origination process ❑ Be affiliated with, under contract to or financed (directly or indirectly) by the Seller or any party that participated in the Mortgage origination process. For these purposes, “affiliated with” means that the Agency and the Seller or other party are related to each other as a consequence of one entity directly or indirectly controlling the other party, being controlled by the other party or being under common control with that party. Gifts and grants from Agencies are not eligible sources of funds for program materials, award letters or terms and conditions provided to the Borrower. The documentation must: ■ Establish that the funds were provided by an Agency ■ Establish that the organization has an established gift or grant program ■ Establish that the funds are a gift or grant that does not have to be repaid ■ Provide evidence that the funds were received by the Borrower or by the Seller on the Borrower’s behalf ■ Identify the donor’s mailing address Freddie Mac Single-Family Seller/Servicer Guide Chapter 5501 As of 03/04/26 Page 5501-27 Gift or grant funds Asset type and eligibility requirements Documentation requirements second home and Investment Property Mortgages. Note: For special requirements for gifts or grants from Agencies for HeritageOne Mortgages, see Section 4504.7(c)(ii). (b) IDA – Agency matching funds subject to Recapture The following table contains eligibility and documentation requirements for IDA – Agency matching funds subject to Recapture: IDA – Agency matching funds subject to Recapture Asset type and eligibility requirements Documentation requirements IDA – Agency matching funds subject to Recapture Agency matching funds subject to Recapture are an eligible source of funds provided that: ■ The matching funds must be considered a gift or grant from an Agency as described in this table ■ A maximum of a 3-to-1 match by an Agency’s funds is permitted ■ The Borrower must satisfy any vesting requirements of the matching IDA program Note: See Section 5501.3(a) for information related to IDA – Agency matching funds not subject to Recapture. Documentation of the IDA program verifying: ■ Matching funds are subject to Recapture ■ Ratio of matching funds by the Agency ■ Regular payments made by the Borrower and the matching organization ■ Vested balance or the percentage of vesting Documentation of matching funds subject to a Recapture provision must also meet the requirements of this table for a gift or grant from an Agency, except that the Seller does not have to establish that the funds do not have to be repaid. (c) Proceeds from an unsecured loan that is an EAH Benefit The following table contains eligibility and documentation requirements for proceeds from an unsecured loan that is an EAH Benefit: Freddie Mac Single-Family Seller/Servicer Guide Chapter 5501 As of 03/04/26 Page 5501-28 Proceeds from an unsecured loan that is an EAH Benefit Asset type and eligibility requirements Documentation requirements Proceeds from an unsecured loan that is an EAH Benefit Proceeds from an unsecured loan that is an EAH Benefit are an eligible source of funds provided that the eligibility requirements in Section 5501.5 are met. Refer to Section 5501.5 for EAH Benefit documentation requirements. 5501.4: Other sources of funds (Future effective date 06/03/26) Sources of funds eligible to be used to qualify the Borrower other than those in Section 5501.3 and the eligibility and documentation requirements are described in the tables below. These requirements apply to all funds used to qualify the Borrower, including reserves. Any limitations on the use of an asset type are specified in the tables. Note: See Section 4501.7(c)(ii) for other eligible sources of funds for Home Possible® Mortgages and Section 4504.7(c)(ii) for other eligible sources of funds for HeritageOne® Mortgages. This section contains requirements related to: ■ Gift or grant funds ■ Individual Development Account (IDA) – Agency matching funds subject to Recapture ■ Proceeds from an unsecured loan that is an Employer Assisted Homeownership (EAH) Benefit (a) Gift or grant funds The following table contains eligibility and documentation requirements for gift or grant funds: Freddie Mac Single-Family Seller/Servicer Guide Chapter 5501 As of 03/04/26 Page 5501-29 Gift or grant funds Asset type and eligibility requirements Documentation requirements 1. Gift funds Gift funds are an eligible source of funds for a Mortgage secured by a Primary Residence or second home provided that funds do not have to be repaid and the donor is one of the following: ■ A Related Person ■ A trust established by a Related Person ■ The estate of a Related Person When a Mortgage is secured by a second home and the loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit (HELOC) (HTLTV) ratio is greater than 80%, the gift funds are permitted only if the Borrower has made a Down Payment of at least 5% from Borrower personal funds as described in Section 5501.3. Gift funds must be transferred directly from the donor’s account in a financial institution to the Borrower’s account or to the settlement or closing agent. Exception: For earnest money deposits, the donor may also provide the gift funds directly to a builder or real estate agent. Note: Gift funds are not an eligible source of funds for Investment Property Mortgages. Gift letter and evidence of receipt of the gift funds. Gift letter must: ■ Be signed by the donor. When the gift is provided by a trust or an estate, the gift letter must be signed by the trustee or the authorized representative of the estate, as applicable. ■ State the donor’s name and that the funds are given by a Related Person, a trust established by a Related Person or the estate of a Related Person, as applicable ■ Include the donor’s mailing address and telephone number. When the donor is a trust or an estate, provide the mailing address and telephone number of the trustee or authorized representative, as applicable. ■ State the actual or the maximum amount of the gift funds ■ Establish that the gift funds are a gift that does not have to be repaid Receipt of gift funds must be documented by one of the following: ■ Transfer of funds from the donor’s account in a financial institution to the Borrower’s account (e.g., copies of bank statements from both the donor and the Borrower’s accounts, a copy of a canceled gift check or a copy of a donor’s withdrawal slip and the Borrower’s deposit slip) ■ Transfer of the funds from the donor’s account in a financial institution to the settlement or closing agent (e.g., a copy of a cashier’s check or wire transfer confirmation) Freddie Mac Single-Family Seller/Servicer Guide Chapter 5501 As of 03/04/26 Page 5501-30 Gift or grant funds Asset type and eligibility requirements Documentation requirements ■ For an earnest money deposit paid by the donor directly to the builder or real estate agent, transfer of funds from the donor’s account in a financial institution to the earnest money deposit holder (e.g., a copy of a canceled gift check, a copy of a cashier’s check or wire transfer confirmation) ■ Funds transferred using a third-party money transfer application or service are acceptable only when the documentation in the Mortgage file evidences that the funds were transferred using the application or service directly from the donor’s bank account to the Borrower’s bank account or to the settlement or closing agent 2. Gift funds received as a wedding gift Gift funds received as a wedding gift from unrelated persons and/or Related Persons are an eligible source of funds for a Mortgage secured by Primary Residence. The gift funds must be on deposit in the Borrower’s depository account within 90 days of the date of the marriage license or certificate. All of the following: ■ The marriage license or certificate ■ A verification of the gift funds in the Borrower’s depository account Freddie Mac Single-Family Seller/Servicer Guide Chapter 5501 As of 03/04/26 Page 5501-31 Gift or grant funds Asset type and eligibility requirements Documentation requirements 3. Gift funds received as a graduation gift Gift funds received as a graduation gift from unrelated persons and/or Related Persons are an eligible source of funds for a Mortgage secured by a Primary Residence. The gift funds must be on deposit in the Borrower’s depository account within 90 days of the date of graduation. All of the following: ■ Evidence of graduation from an educational institution (e.g., diploma or transcripts) that supports the date of graduation ■ A verification of the gift funds in the Borrower’s depository account Freddie Mac Single-Family Seller/Servicer Guide Chapter 5501 As of 03/04/26 Page 5501-32 Gift or grant funds Asset type and eligibility requirements Documentation requirements 4. Gift of equity A gift of equity is a credit to the Borrower from the property seller’s equity in the subject property. A gift of equity must not used as: ■ A source of funds for reserves ■ Cash back to the Borrower A gift of equity is an eligible source of funds for a Mortgage secured by a Primary Residence or second home provided the gift of equity does not have to be repaid and the donor is one of the following: ■ A Related Person ■ A trust established by a Related Person ■ The estate of a Related Person When a Mortgage is secured by a second home and the LTV/TLTV/HTLTV ratio is greater than 80%, a gift of equity is permitted only if the Borrower has made a Down Payment of at least 5% from Borrower personal funds as described in Section 5501.3. Note: A gift of equity is not an eligible source of funds for Investment Property Mortgages. Gift letter and evidence of receipt of the gift of equity. ■ Gift letter must: ❑Be signed by the donor. When the gift is provided by a trust or an estate, the gift letter must be signed by the trustee or the authorized representative of the estate, as applicable. ❑State the donor’s name and that the gift of equity is given by a Related Person, a trust established by a Related Person or the estate of a Related Person, as applicable ❑Include the donor’s mailing address and telephone number. When the donor is a trust or an estate, provide the mailing address and telephone number if the trustee or authorized representative, as applicable. ❑State the actual or the maximum amount of the gift of equity ❑Establish that the gift of equity does not have to be repaid ■ Receipt of the gift of equity must be reflected on the Settlement/Closing Disclosure Statement 5. A gift or grant from an Agency A gift or grant from an Agency that does not have to be repaid is an Documentation supporting a gift or grant from an Agency. Examples of acceptable documentation include copies of grant program materials, award letters or terms and conditions provided to the Borrower. Freddie Mac Single-Family Seller/Servicer Guide Chapter 5501 As of 03/04/26 Page 5501-33 Gift or grant funds Asset type and eligibility requirements Documentation requirements eligible source of funds provided that: ■ The gift or grant is given pursuant to an established program ■ The Agency is not an interested party (as described in Section 5501.6) ■ The funds were not obtained from an interested party either directly or through a third party; and ■ With respect to the subject Mortgage, the Agency must not: ❑ Be the Seller or have participated in any aspect of the Mortgage origination process ❑ Be affiliated with, under contract to or financed (directly or indirectly) by the Seller or any party that participated in the Mortgage origination process. For these purposes, “affiliated with” means that the Agency and the Seller or other party are related to each other as a consequence of one entity directly or indirectly controlling the other party, being controlled by the other party or being under common control with that party. Gifts and grants from Agencies are not eligible sources of funds for The documentation must: ■ Establish that the funds were provided by an Agency ■ Establish that the organization has an established gift or grant program ■ Establish that the funds are a gift or grant that does not have to be repaid ■ Provide evidence that the funds were received by the Borrower or by the Seller on the Borrower’s behalf ■ Identify the donor’s mailing address Freddie Mac Single-Family Seller/Servicer Guide Chapter 5501 As of 03/04/26 Page 5501-34 Gift or grant funds Asset type and eligibility requirements Documentation requirements second home and Investment Property Mortgages. Note: For special requirements for gifts or grants from Agencies for HeritageOne Mortgages, see Section 4504.7(c)(ii). (b) IDA – Agency matching funds subject to Recapture The following table contains eligibility and documentation requirements for IDA – Agency matching funds subject to Recapture: IDA – Agency matching funds subject to Recapture Asset type and eligibility requirements Documentation requirements IDA – Agency matching funds subject to Recapture Agency matching funds subject to Recapture are an eligible source of funds provided that: ■ The matching funds must be considered a gift or grant from an Agency as described in this table ■ A maximum of a 3-to-1 match by an Agency’s funds is permitted ■ The Borrower must satisfy any vesting requirements of the matching IDA program Note: See Section 5501.3(a) for information related to IDA – Agency matching funds not subject to Recapture. Documentation of the IDA program verifying: ■ Matching funds are subject to Recapture ■ Ratio of matching funds by the Agency ■ Regular payments made by the Borrower and the matching organization ■ Vested balance or the percentage of vesting Documentation of matching funds subject to a Recapture provision must also meet the requirements of this table for a gift or grant from an Agency, except that the Seller does not have to establish that the funds do not have to be repaid. (c) Proceeds from an unsecured loan that is an EAH Benefit The following table contains eligibility and documentation requirements for proceeds from an unsecured loan that is an EAH Benefit: Freddie Mac Single-Family Seller/Servicer Guide Chapter 5501 As of 03/04/26 Page 5501-35 Proceeds from an unsecured loan that is an EAH Benefit Asset type and eligibility requirements Documentation requirements Proceeds from an unsecured loan that is an EAH Benefit Proceeds from an unsecured loan that is an EAH Benefit are an eligible source of funds provided that the eligibility requirements in Section 5501.5 are met. Refer to Section 5501.5 for EAH Benefit documentation requirements. 5501.5: Employer Assisted Homeownership (EAH) Benefit (05/07/25) This section contains requirements related to: ■ General requirements ■ Types of benefits ■ Documentation requirements ■ Special delivery requirement (a) General requirements An Employer Assisted Homeownership (EAH) Benefit may be used as a source of funds to qualify the Borrower if the terms of the EAH Benefit meet the following requirements: ■ The EAH Benefit is provided to an employee from the employer pursuant to an established, ongoing and documented employer benefit program, provided: ❑ The employer is not an interested party (as described in Section 5501.6); and ❑ The funds were not obtained from an interested party either directly or through a third party ■ The Mortgage is secured by a 1- to 4-unit Primary Residence (b) Types of benefits Freddie Mac Single-Family Seller/Servicer Guide Chapter 5501 As of 03/04/26 Page 5501-36 The EAH Benefit may be any of the following types of benefits meeting the requirements in the table below: Requirements based on type of EAH Benefit Type of EAH Benefit Requirements Grant See requirements for gift or grant from an Agency in Section 5501.4. With respect to the subject Mortgage, the requirement that the Agency must not be the Seller or have participated in any aspect of the Mortgage origination process and must not be affiliated with, under contract to or financed (directly or indirectly) by the Seller or any party that participated in the Mortgage origination process does not apply. Individual Development Account (IDA) See requirements for matching funds for IDAs in Sections 5501.3(a) and 5501.4(b). With respect to the subject Mortgage, the requirement that the Agency must not be the Seller or have participated in any aspect of the Mortgage origination process and must not be affiliated with, under contract to or financed (directly or indirectly) by the Seller or any party that participated in the Mortgage origination process does not apply. Unsecured loan An unsecured loan may be fully repayable, deferred payment or forgivable. The source, terms and conditions must be documented on Form 65, Uniform Residential Loan Application. Proceeds from an unsecured loan that is an EAH Benefit may be used to fund all or part of the Down Payment or Closing Costs. The terms of the EAH Benefit may not require repayment in full unless either: ■ The Borrower terminates their employment for any reason ■ The employer terminates the Borrower’s employment for any reason other than long-term disability, the elimination of the employee’s position or reduction in force If the EAH Benefit is fully repayable, the required monthly payment must be included when calculating the monthly debt payment-to-income (DTI) ratio. However, if the monthly payment of principal and interest or interest only begins on or after the 61st monthly payment under the First Lien Mortgage or if repayment of the loan is due only upon sale or default, Freddie Mac Single-Family Seller/Servicer Guide Chapter 5501 As of 03/04/26 Page 5501-37 the amount of the monthly payment may be excluded from the monthly DTI ratio. Note: See Section 4408.1 for requirements when an EAH Benefit is used as a source of funds to qualify for a Mortgage made pursuant to an employee relocation program. Secondary financing Secondary financing may be fully repayable, deferred payment or forgivable and must meet the secondary financing requirements in Sections 4204.1(a) and 4204.1(b). The terms of the EAH Benefit may not require repayment in full unless either: ■ The Borrower terminates their employment for any reason ■ The employer terminates the Borrower’s employment for any reason other than long-term disability, the elimination of the employee’s position or reduction in force If the monthly payment of principal and interest or interest only begins on or after the 61st monthly payment under the First Lien Mortgage or if repayment of the loan is due only upon sale or default, the amount of the monthly payment may be excluded from the monthly DTI ratio; otherwise, the required monthly payments must be included in calculating the monthly housing expense-to-income ratio. Note: See Section 4408.1 for requirements when an EAH Benefit is used as a source of funds to qualify for a Mortgage made pursuant to an employee relocation program. Affordable Second® An Affordable Second may be fully repayable, deferred payment or forgivable, and must meet the Affordable Seconds requirements of Section 4204.2. With respect to the subject Mortgage, the requirement that the Agency must not be the Seller or have participated in any aspect of the Mortgage origination process and must not be affiliated with, under contract to or financed (directly or indirectly) by the Seller or any party that participated in the Mortgage origination process does not apply. The terms of the EAH Benefit may not require repayment in full unless either: ■ The Borrower terminates their employment for any reason ■ The employer terminates the Borrower’s employment for any reason other than long-term disability, the elimination of the employee’s position or reduction in force Freddie Mac Single-Family Seller/Servicer Guide Chapter 5501 As of 03/04/26 Page 5501-38 If the monthly payment of principal and interest or interest only begins on or after the 61st monthly payment under the First Lien Mortgage or if repayment of the loan is due only upon sale or default, the amount of the monthly payment may be excluded from the monthly DTI ratio; otherwise, the required monthly payments must be included in calculating the monthly housing expense-to-income ratio. (c) Documentation requirements In addition to the documentation requirements for specific benefit types, the following requirements must be met: ■ EAH Benefits must be documented with a copy of the employer benefit program that provides the amount of the benefit and the terms of the program ■ Evidence of receipt of the EAH Benefit must be provided (e.g., funds on deposit in Borrower’s account or funds reflected on the Settlement/Closing Disclosure Statement) (d) Special delivery requirement The Seller must deliver ULDD Data Point Investor Feature Identifier valid value “D25” when delivering a Mortgage with EAH Benefits. See Section 6302.29 for more information.

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