themortgagellm™1-unit investment LCOR at 80% LTV: Freddie eligible, Fannie not
“Will Freddie buy this? Limited cash-out refi, 1-unit investment, $320K loan on $400K value, 740 FICO, 40% DTI.”
Response
❌✅ Eligible to Freddie Mac only. Fannie Mae would not buy this loan as structured.
Loan parameters:
- Limited cash-out refinance, 1-unit investment property, FRM (standard product)
- $320,000 loan on $400,000 value (LTV 80.00%)
- 740 FICO, 40.0% DTI
- Underwriting: DU Approve / LPA Accept
Fannie Mae
❌ Ineligible — fails one or more delivery checks.
Rules evaluated: fnm-em-2026-05-06-1to4u-investment-lcor, fnm-em-2026-05-06-guard-credit-floor
Failing checks:
- Max LTV 75% — observed LTV 80.00% (cite: B2-1.5-02)
- Max CLTV 75% — observed CLTV 80.00% (cite: B2-1.5-02)
- Max HCLTV 75% — observed HCLTV 80.00% (cite: B2-1.5-02)
Freddie Mac
✅ Eligible — meets standard delivery requirements.
Rules evaluated: fre-em-2026-05-06-1u-investment-purchase-no-cashout, fre-em-2026-05-06-guard-credit-floor
Passing checks:
- Max LTV 85% — observed 80.00%, within ceiling
- Max TLTV / HTLTV 85% — within ceiling
- Minimum representative credit score 620 — 740 well above floor
- Maximum DTI 50% — 40% within
Why the diff? Fannie's Eligibility Matrix splits 1-unit investment property by transaction type: purchase caps at 85% LTV, but limited cash-out refinance (LCOR) tightens to 75% (applying across 1-4 unit investment LCORs uniformly). Freddie's Chapter 4203.1(b)(ii) takes a different approach: purchase and "no-cash-out" refinance share a single row at 85% LTV for 1-unit investment, regardless of whether it's a purchase or a no-cash-out refi. The same 80% LTV loan therefore clears Freddie's ceiling but not Fannie's.
To deliver this loan to Fannie, the borrower would need to reduce the loan amount to ≤$300,000 (75% of $400,000). To deliver to Freddie as-is, no changes needed.