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No Cash-out Refinance Mortgages
Consolidate higher-rate seconds into one, lower-rate loan

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Being competitive in today's mortgage market means offering your customers smart, affordable and convenient mortgage options designed to fit their changing needs. Offer your borrowers a no cash-out refinance mortgage to reduce their interest rate and monthly payment, consolidate higher-rate seconds into one, lower-rate loan and more.

A no cash-out refinance mortgage can lower a borrower's monthly payment, and all related closing costs, financing costs and prepaids/escrows can be rolled into the new loan amount.

There's no seasoning requirement for the mortgage being refinanced. Plus, when you use Loan Prospector® automated underwriting technology to evaluate no cash-out refinance mortgages, you'll approve more borrowers and streamline your process with less documentation. Plus, check out our Streamlined Refinance Mortgages for more ways to streamline the refinance process for your borrower.

Product Features

We are revising our requirements for No Cash-out Refinance Mortgages effective for Freddie Mac settlements on and after January 2, 2009. Please refer to our October 17 Single-Family Seller/Servicer Guide Bulletin [PDF 183K ] for more information.

Feature Requirements
Property Type
  • 1- to 4-unit primary residences, including condos, PUDs and manufactured homes.
  • Second homes
  • 1- to 4-unit investment properties
Eligible Mortgage Products
  • 15-, 20-, 30-, and 40-year fixed-rate mortgages
  • 5- and 7-year balloon/reset mortgages
  • Most ARMs
Maximum LTV Ratios (without secondary financing)
Down Payment or Closing Costs
  • All closing costs, financing costs and prepaids can be rolled into the new loan amount.
Eligibility/Underwriting
  • Loan Prospector Accept
  • Non-Loan Prospector
  • New mortgage may include amounts used to pay off junior liens secured by the mortgaged premises that were used in their entirety to acquire the subject property, or must be subordinated or paid off from borrower funds.
  • No seasoning requirement.
  • When a Seller originates a cash-out refinance mortgage, the Seller holds that mortgage for six months, and that mortgage is refinanced with a no cash-out refinance mortgage, the refinance mortgage is ineligible for sale as a no cash out refinance mortgage.  The mortgage must be sold to Freddie Mac as a cash-out refinance mortgage*.
  • New loan application required. A borrower may be added or removed from the mortgage.
  • Mortgage payment history and minimum income documentation in accordance with Loan Prospector credit risk/documentation class or Single-Family Seller/Servicer Guide (Guide) requirements.
  • No asset documentation required. Seller must verify reserves if they are entered in Loan Prospector.
  • For manually underwritten no cash-out refinance mortgages, the Seller must make the determination regarding borrower creditworthiness in accordance with the requirements of the Guide Section 37.4(b).

*Effective for mortgages with Freddie Mac settlement dates on or after August 1, 2008.
Execution Options
  • Servicing-retained Cash*
  • Fixed-rate Guarantor
  • WAC ARM Guarantor
  • MultiLender Swap

* See our selling system availability matrix [PDF 72K] for a list of specific mortgages eligible for sale best efforts or mandatory, servicing released.
Delivery Fees
  • Postsettlement delivery fees may apply based on the individual characteristics of the mortgage. See Guide Exhibit 19 [PDF 183K] for details on applicable fees.
Special Delivery Requirements
  • You must deliver all mortgage data required by Form 11 or Form 13SF, as applicable.
Single-Family Seller/Servicer Guide
  • Refer to Guide Section 24.5


Download a No Cash-out Refinance Mortgage fact sheet [PDF 107K] for more details.

Lender Benefits

No cash-out refinance mortgages help you:

  • Retain your current customer base and increase your origination volume with options to meet the needs of more borrowers.
  • Improve efficiencies using Loan Prospector technology.
  • Easily sell more mortgages to Freddie Mac.

Benefits for Your Borrowers

No cash-out refinance mortgages help your borrowers:

  • Lower their interest rate and payment.
  • Consolidate higher-rate seconds into one, lower-rate loan.
  • Eliminate upfront costs by rolling in all related closing costs, financing costs and prepaid items into the new loan amount.
  • Eliminate mortgage insurance when the new appraisal or inspection report supports a higher value to calculate the new LTV ratio.

For More Information

Training Opportunities

Visit The Learning Center for live and recorded web conferences, access to classroom-style workshops and self-study tools – all designed to help you stay competitive, serve more borrowers and make it easier to do business with us.

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.


© 2008 Freddie Mac