What type of loan is Freddie Mac?
The Freddie Mac HFA Advantage® mortgage is a conventional mortgage product available exclusively to housing finance agencies (HFAs) seeking strategic solutions to diversify their product offerings and portfolio mix while expanding homeownership responsibly.
Perhaps the most notable differences between a Freddie Mac Home Possible Loan and an FHA Loan are the upfront funding fees and mortgage insurance policies. A Freddie Mac Home Possible Loan requires neither an upfront funding fee nor mortgage insurance.
The Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, is a publicly traded, government-sponsored enterprise (GSE), headquartered in Tysons, Virginia. The FHLMC was created in 1970 to expand the secondary market for mortgages in the US.
Fannie Mae and Freddie Mac buy mortgages from lenders and either hold these mortgages in their portfolios or package the loans into mortgage-backed securities (MBS) that may be sold. Lenders use the cash raised by selling mortgages to the Enterprises to engage in further lending.
Fannie Mae and Freddie Mac are restricted by law to purchasing single-family mortgages with origination balances below a specific amount, known as the “conforming loan limit” (CLL) value. Loans above this amount are known as jumbo loans.
All loans backed by Fannie Mae and Freddie Mac are typically conventional loans, which are not insured by the government.
We encourage you to contact your servicer (often your bank or lender) to verify that your mortgage loan is owned or guaranteed by Fannie Mae or Freddie Mac, or you may verify it yourself by accessing the following websites: Fannie Mae www.KnowYourOptions.com/loanlookup, Freddie Mac www.freddiemac.com/mymortgage.
The difference between Fannie Mae and Freddie Mac
While both are better known by their nicknames, Fannie Mae and Freddie Mac have more official titles: Fannie Mae is the Federal National Mortgage Association (FNMA) and Freddie Mac is the Federal Home Loan Mortgage Corporation (FMCC).
- Flexible loan sizes, starting at just $750,000 and going up to $7.5 million.
- Low interest rates, starting from just 4.51%
- High leverage, up to 80% LTV.
- Generous DSCR minimums, as low as 1.20x.
- 30-year amortizations, keeping payments low for borrowers.
Income limit: Your total annual income cannot exceed 80% of your area's median income (AMI). Check out Freddie Mac's income lookup tool to find the income limit in your area. Loan-to-value ratio (LTV): The LTV you'll need to qualify for a Home Possible loan ranges from 80% – 105%.
Is Freddie Mac a mortgage bank?
No. Freddie Mac does not make loans directly to homebuyers. Our primary business is to purchase loans from lenders to replenish their supply of funds so that they can make more mortgage loans to other borrowers. What is the secondary mortgage market?
Cons of Freddie Mac Loans
Freddie Mac loans are not without their downsides. For example, they require borrowers to pay upfront application fees, and they exclude certain property types—including senior housing, student housing, and other affordable commercial property types.
No. Freddie Mac was chartered by Congress as a private company serving a public purpose. On September 6, 2008, the Director of the Federal Housing Finance Agency (FHFA), appointed FHFA as conservator of Freddie Mac.
The two corporations each purchase their loans from different sources — Fannie Mae buys them from large banks and credit unions while Freddie Mac buys them from smaller banks and credit unions. Both entities purchase and sell conventional loans.
| Units | Minimum/Maximum Original Loan Amount | Properties in Alaska, Hawaii, Guam and the U.S. Virgin Islands |
|---|---|---|
| Minimum Loan Amount | Maximum Loan Amount** | |
| 1 | $766,551 | None in 2024 |
| 2 | $981,501 | None in 2024 |
| 3 | $1,186,351 | None in 2024 |
There are some online tools you can use to look up who owns your mortgage. Many mortgages are owned by Fannie Mae and Freddie Mac. Both offer a mortgage look up tool on their website. You can look up your mortgage servicer by searching the Mortgage Electronic Registration Systems (MERS) website.
Is Fannie Mae the FHA? No. The Federal Housing Administration (FHA) is a government agency that insures loans made by lenders to borrowers with low to moderate incomes. FHA loans have more relaxed credit standards than conventional loans purchased by Fannie Mae and Freddie Mac.
Fannie Mae and Freddie Mac: Differences
One of the most significant is where they get their loans. Fannie Mae mostly buys loans from large commercial banks. Freddie Mac has smaller banks, credit unions, savings and loans as its target market. The two also offer different loan programs.
As of 2023, Fannie Mae and Freddie Mac support around 70 percent of the mortgage market, according to the National Association of Realtors. That means the majority of conventional loans, those offered by private lenders, end up being backed or purchased by one of the two entities.
By selling mortgages to companies such as Freddie Mac, lenders have the ability to continue making more home loans. Freddie Mac supports the secondary mortgage market by helping keep money flowing through the mortgage system, regardless of whether economic times are good or bad.
Why is it called Freddie Mac?
Similar to Fannie and Ginnie, Freddie Mac, or Federal Home Loan Mortgage Corporation, was derived from its acronym FHLMC. Freddie, from “F” and Mac from “MC.” It seems the jury is still out on as to why letters “HL” were left out.
The Freddie Mac Home Possible® mortgage offers more options and credit flexibilities than ever before to help your very low-to low-income borrowers attain the dream of owning a home.
The Mortgage must have a minimum Indicator Score of 620. If no Borrower has a usable Credit Score, then the Mortgage does not have an Indicator Score and is not eligible for delivery to Freddie Mac.
Available to qualified first-time homebuyers for a low down payment of just 3%, the Freddie Mac HomeOne® mortgage is a low down payment option that serves the needs of many first-time homebuyers, along with no cash-out refinance borrowers.
You may also qualify for other home loan programs, including: FHA loan — Requirements: 3.5% down, 580 FICO credit score minimum, 43% DTI ratio maximum. Conventional 97 loan — (offered by Fannie Mae/Freddie Mac). Requirements: 3% down, 620-660 FICO credit score minimum, 50% DTI maximum, 97% LTV ratio maximum.
