CHOICERenovation® Mortgage

BORROWER PROFILE KEY FEATURES BORROWER BENEFITS

CHOICERenovation is designed

to meet the needs of:

• Borrowers looking for

convenience and cost savings

by ﬁnancing their home

purchase and renovation costs

in a single loan.

• Homeowners looking for a

no cash-out reﬁnance option

to make home improvements

or repairs to their existing

property.

• First-time homebuyers,

homeowners looking to age

in place and multigenerational

families in need of living space

customization.

• Purchase and no cash out

reﬁnancing.

• Maximum 95% LTV/TLTV/HTLTV

FTHB if >95% HomeOne

only.

97% Home Possible

only.

• Eligible for appraised value

representations and warranty

relief through Loan Collateral

Advisor

• Renovations to improve energy

and/or water eﬃciency.

• Term of Business (TOB) path

available for eligible sellers to

deliver loans before renovations

are complete.

• Ability to draw 50% of the

material costs at closing.

• Save time and money. Allow

borrowers to purchase homes and

ﬁnance the cost of renovations

with a single-close mortgage.

• Package the beneﬁts. Combine

this oﬀering with our low down

payment and higher LTV solutions

to make ﬁnancing renovation

projects even more aﬀordable.

• Increase home values. Whether

borrowers are looking to improve

a home they intend to purchase

or upgrade their current living

conditions, home improvements

and repairs can increase the value

of their homes.

Our innovative solution for financing home improvements

designed for borrowers looking for convenience and

cost savings by financing both their home purchase and

renovation costs in a single loan.

Freddie Mac’s CHOICERenovation

offering allows

lenders and borrowers to save time and money by

financing home improvements using one loan and one

closing. With CHOICERenovation, lenders can expand

their business by meeting a greater variety of client needs

and offering a mortgage financing solution that helps

address the aging housing supply, the increasing demand

for cost-effective financing, aging-in-place housing

solutions, and supports the need for affordable housing.

CHOICERenovation

Mortgage

ELIGIBLE PROPERTY TYPES

• 1-4-unit primary residence

• Manufactured homes

• Second homes

• 1-unit investment property

• Units located in planned unit developments (PUDs),

condominiums, cooperatives or leasehold estates are

acceptable

ELIGIBLE MORTGAGES

• Purchase

• No cash out reﬁnance (NCOR)

• Fixed rate and adjustable rate mortgages

• Freddie Mac Home Possible

mortgages

• Freddie Mac HomeOne

mortgages

• Super conforming mortgages

GENERAL ELIGIBILITY REQUIREMENTS

All renovations must be completed within 450 days of the Note Date.

Maximum LTV / TLTV / HTLTV Ratios*

FIXED RATE AND ADJUSTABLE RATE MORTGAGES

Property Type Maximum LTV Maximum TLTV

1-unit primary

FTHB if >95% HomeOne only. 97%

Home Possible

only.

TLTV to 105% with eligible

Affordable Seconds (Home

Possible or HomeOne only)

2-unit primary 85%

3 & 4-unit primary 80%

Second home

1-unit investment properties

90%

85% (7/1 and 10/1 ARMs)

Manufactured homes 95% 95%

Must comply with the LTV/TLTV/HTLTV ratios in Section 4203.4 and any other applicable LTV/TLTV/HTLV ratio requirement for

the speciﬁc Mortgage Product or oﬀering.

*Please note, the maximum LTV ratios depend on the speciﬁc product or oﬀering; there may be additional possible LTV ratios,

i.e. condominiums when the project reviews are streamlined; these numbers are subject to change.

DETERMINING VALUE

Purchase Transaction No Cash Out Reﬁnance

Value is the lesser of:

• The purchase price of the mortgaged premises prior

to the renovations plus the renovation costs (costs of

demolition and reconstruction), or

• Appraised value of the mortgaged premises, as completed.

Value is the appraised value of the mortgaged premises,

as completed

ELIGIBLE RENOVATIONS

Proceeds must only be used to ﬁnance renovations that are

made to an existing dwelling, and may include:

• Fees related to plans and speciﬁcations, permits, title

updates, appraisals, draw inspections and the ﬁnal

inspection

• An amount up to, but no more than, six monthly

payments of principal, interest, taxes and insurance (PITI)

Proceeds may be used to renovate or repair a property that

has been damaged in a disaster or for renovations that will

protect the mortgaged premises in case of a future disaster

(e.g., storm surge barriers, foundation retroﬁtting for

earthquakes, retaining walls, etc.)

• Renovations to construct or update various outdoor

structures for leisure and recreation, including, but not

limited to, swimming pools, decking, screening and

porch and patio additions

• Renovations to improve energy and/or water eﬃciency

of the mortgage premises

Proceeds may not be used:

• To raze an existing structure and build a new dwelling.

• For items not permanently aﬃxed to the property, with the exception of new appliances.

Renovations must comply with all applicable state and local laws and regulations, including zoning regulations. All required

permits and approvals must be obtained. Renovations of properties located in planned unit developments (PUDs),

condominium projects or cooperative projects must comply with all applicable project conditions, covenants and restrictions.

Renovations to a manufactured home are allowed, provided the manufactured home remains in compliance with HUD’s

property acceptability criteria for manufactured homes and the requirements in Sections 5703.2(a) and 5703.2(b).

MAXIMUM FINANCED RENOVATION COSTS

Purchase Transaction No Cash Out Reﬁnance Manufactured Homes

The total cost of the ﬁnanced

renovations must not exceed 75% of

the lesser of the:

• Sum of the purchase price of the

property plus the estimated cost

of the renovations, or

• “As completed” value of the

property as determined by the

appraiser pursuant to Section

4607.9

The total cost of the ﬁnanced

renovations must not exceed 75%

of the “as completed” value of

the property as determined by

the appraiser pursuant to Section

4607.9.

Total ﬁnanced renovation costs for

manufactured homes (purchase

and reﬁnance transactions) must not

exceed the lesser of:

• $50,000, or

• 50% of the “as completed” value

of the property as determined by

the appraiser pursuant to Section

4607.9

Renovation Funds

• On the Note Date, funds suﬃcient to cover the total cost of the renovations must be deposited into a completion escrow

account. For mortgages with renovations not completed by the settlement date, such account must be a custodial account

for renovation funds.

• The renovation costs identiﬁed in the construction contract must be consistent with the amount of funds deposited into the

completion escrow account or custodial account for renovation funds, as applicable.

• If the proceeds are insuﬃcient to cover the contracted cost of the renovations, the borrower must deposit suﬃcient funds to

pay the remaining amount into the completion escrow account (custodial account for renovation funds) as applicable.

Contingency Reserve

• In addition to the renovation funds required to be deposited into the custodial account for renovation funds, the seller must

also deposit a contingency reserve to cover unforeseen renovation costs.

• Contingency reserve funds may come from the mortgage proceeds or directly from the borrower.

Minimum Maximum

• This amount must be ≥ to 10% of the total renovation

costs, except that if the property utilities are not operable

as referenced in the construction contract and/or plans

and speciﬁcations, then the minimum contingency

reserve amount must ≥ 15% of the total renovation costs.

• No minimum contingency reserve requirement for

mortgages sold with recourse when ﬁnancing projects of

outdoor structures for leisure or recreation.

• This amount must be ≤ 20% of the total renovation costs.

Unused Funds

If the mortgage is current:

• Any funds remaining in the

completion escrow account

(custodial account) for renovation

funds, as applicable, aer the costs

of all renovations have been paid

to the appropriate parties must be

used to reduce the unpaid balance

(UPB) or used for additional

renovations as described under

eligible renovations.

If the transaction is a “no cash-out”

reﬁnance transaction:

• Remaining proceeds may be

disbursed to the borrower,

provided the total amount

disbursed to the borrower at

closing and from the unused funds

does not exceed the maximum

amount allowed under Section

4301.4.

• If the borrower funded the

contingency reserve with his or her

own funds, he or she may receive

those unused funds back.

If the remaining funds are used for

additional renovations, the seller must:

• Document that additional

renovations were paid for from

the completion escrow account

(custodial account) for renovation

funds, as applicable, and verify

the funds are being used to further

improve the Mortgaged Premises.

• Verify the additional renovation

work has been completed by

obtaining a completion report

pursuant to Section 4607.9.

If the mortgage is delinquent:

• Any unused funds (including contingency reserve funds provided by the borrower, if applicable) must be applied in

accordance with the application of payment requirements in the note and security instrument.

• Aer the mortgage is brought current, any remaining unused funds (including contingency reserve funds not provided by

the borrower) may be used to reduce the UPB or used for additional renovations (as noted above).

TERM OF BUSINESS (TOB) PATH

Loans sold before renovation completion with recourse require one-time Seller approval.

To deliver such loans, the Seller must obtain Freddie Mac’s prior approval.

• Must have a minimum of 2 years originating and/or servicing renovation loans.

• Must be eligible to deliver loans with recourse.

Recourse

• See Section 4607.15 for complete requirements.

DELIVERY REQUIREMENTS

• Final inspection (442).

• Delivered with IFI codes.

• Proof of ﬁrst lien position.

See Section 6302.43 for special delivery requirements.

Please note all mortgages with LTV ratios greater than 80% must have MI coverage in order to be eligible for sale to Freddie

Mac. Please contact MIs directly to receive more information on any MI-related questions on CHOICERenovation mortgages

delivered prior to renovation being complete and/or aer renovations are completed.

Learn more about CHOICERenovation mortgages:

• Visit the CHOICERenovation web page

• Review Chapter 4607 of the Single-Family Seller/Servicer Guide

• Contact your Freddie Mac account executive.

• Call the Customer Support Contact Center at 800-FREDDIE

The information in this document is not a replacement or substitute for information found in the Single-Family

Seller/Servicer Guide and/or the terms of your Master Agreement and/or Master Commitment.

FreddieMac.com 09998970 June 2022