Freddie Mac Single-Family Seller/Servicer Guide 4602.1 — Construction to Permanent Mortgages and Renovation Mortgages

Refer to Bulletin 2025-7, which announced the policy requirements for Uniform Appraisal Dataset (UAD) 3.6. Sellers may submit to the Uniform Collateral Data Portal® appraisal reports that use UAD 3.6 before the mandatory effective November 2, 2026 version of this section. The requirements of this section apply to all Construction to Permanent Mortgages and Renovation Mortgages. Additionally, One-Time Close transactions must meet the requirements in Section 4602.2 and Two-Time Close transactions must meet the requirements in Section 4602.3. This section contains requirements related to: ■ Eligible Mortgages ■ Ineligible Mortgages ■ Eligible use of Interim Construction Financing proceeds ■ Permanent Financing proceeds ■ Eligible property ■ Borrower eligibility ■ Completion status of the Mortgaged Premises ■ Mortgage file documentation ■ Seller-Owned Modified Mortgages and Seller-Owned Converted Mortgages ■ Credit Fees

(a) Eligible Mortgages Mortgages must be First Lien Mortgages and may be any Mortgage Product or offering eligible under the Guide unless specifically described as ineligible in this section.

(b) Ineligible Mortgages The following Mortgages are ineligible as Construction to Permanent Mortgages and Renovation Mortgages: ■ Community Land Trust Mortgages ■ Government Mortgages ■ Mortgages secured by properties subject to income-based resale restrictions ■ Special purpose cash-out refinance Mortgages

(c) Eligible use of Interim Construction Financing proceeds For purchase transaction Mortgages, the proceeds of the Interim Construction Financing may be used as described in the table below: Eligible use of Interim Construction Financing proceeds Purchase transaction Construction to Permanent Mortgage Renovation Mortgage ■ Purchase the land or acquire a leasehold interest in the land ■ Pay construction costs ■ Pay costs for site preparation, including the removal of an existing Manufactured Home ■ For Mortgages secured by Manufactured Homes, acquire the Manufactured Home and pay construction costs, including costs to affix the Manufactured Home to a permanent foundation ■ Purchase the Mortgaged Premises ■ Pay renovation costs For refinance Mortgages, the proceeds of the Interim Construction Financing may be used as described in the table below: Eligible use of Interim Construction Financing proceeds Refinance transaction Construction to Permanent Mortgage Renovation Mortgage ■ Pay off any existing liens on the land ■ Pay construction costs ■ Pay costs for site preparation, including the removal of an existing Manufactured Home ■ For Mortgages secured by Manufactured Homes, acquire the Manufactured Home and pay construction costs, including costs to affix the Manufactured Home to a permanent foundation ■ Pay all Closing Costs ■ Pay off any existing liens on the land and on the improvements ■ Pay renovation costs ■ Pay all Closing Costs

(d) Permanent Financing proceeds Permanent Financing proceeds are used to replace Interim Construction Financing after construction or renovations are complete and must not be used for the purpose of making a single disbursement of funds to a builder or contractor or for the assumption of an existing Mortgage.

(e) Eligible property A Construction to Permanent Mortgage must be secured by: ■ A newly built or constructed 1- to 4-unit site-built home, or ■ A newly purchased Manufactured Home that has never been attached to a foundation A Renovation Mortgage must be secured by: ■ An existing 1-to 4-unit site-built home, or ■ An existing Manufactured Home that meets the general requirements in Section 5703.2 and the property eligibility requirements in Section 5703.3(a) Prior to the start of construction or renovation work, the Borrower must own the land or Mortgaged Premises in fee simple or have a leasehold estate meeting the requirements of Chapter 5704. The Borrower may have acquired the land through a purchase, inheritance, gift or legal award in accordance with a final judgment or decision from a legal body (e.g., court, jury, judge or arbitrator) such as in a case of divorce, separation or dissolution of a domestic partnership.

(f) Borrower eligibility The Borrower on the Permanent Financing must be the Borrower on, and obligated to repay, the Interim Construction Financing, and any other outstanding prior financing, including installation financing or outstanding prior Mortgages. Exceptions: ■ A Borrower may be omitted in the event of death or divorce ■ A Borrower who is a Related Person may be added, provided that all Borrowers on the Permanent Financing are owner-occupants of the Mortgaged Premises and considered in the underwriting of the Permanent Financing The builder/developer must not be obligated to repay the Interim Construction Financing or any Mortgage on the land or the improvements except when the builder/developer is the Borrower on the Permanent Financing and will occupy the Mortgaged Premises as their Primary Residence.

(g) Completion status of the Mortgaged Premises All improvements to the Mortgaged Premises must be fully completed before the Settlement Date, except for Mortgages meeting the requirements in Section 5601.3. For Manufactured Homes, the installation must be fully complete, including permanent utility connections and construction of any site-built improvements such as garages, decks, or porches, before the Settlement Date as evidenced by a satisfactory completion report. For both site-built homes and Manufactured Homes, the Seller must obtain a completion report in accordance with the requirements in Section 5605.8.

(h) Mortgage file documentation For Construction to Permanent Mortgages and Renovation Mortgages, the Mortgage file must include: ■ Documentation that supports classification of the Mortgage as a Construction to Permanent Mortgage or a Renovation Mortgage ■ Sufficient documentation (e.g., purchase contracts, plans and specifications, receipts, invoices, lien waivers) on which to validate the actual cost to construct or renovate the home ■ A document that clearly shows the Seller’s calculation of the purchase price and/or cost to construct ■ The Settlement/Closing Disclosure Statement or an alternative form required by law evidencing all costs to homebuyer and property seller for the Interim Construction Financing ■ The Settlement/Closing Disclosure Statement for the Permanent Financing ■ For a Mortgage secured by a Manufactured Home, the manufacturer’s invoice and the Manufactured Home Purchase Agreement

(i) Seller-Owned Modified Mortgages and Seller-Owned Converted Mortgages Seller-Owned Modified Mortgages and Seller-Owned Converted Mortgages (as described in Chapter 4402) may not be used to modify or convert Interim Construction Financing to Permanent Financing. After the Effective Date of Permanent Financing, if the terms of the Permanent Financing have been modified or if an ARM converted to a fixed-rate Mortgage, the resulting Mortgage is a Seller-Owned Modified Mortgage or Seller-Owned Converted Mortgage, as applicable, and must meet the requirements of Chapter 4402 and other provisions related to these Mortgages.

(j) Credit Fees The Seller must refer to Exhibit 19, Credit Fees, for Credit Fees related to Construction to Permanent Mortgages and Renovation Mortgages. Credit Fees are paid in accordance with the Credit Fee provisions stated in Chapter 6303.

Renovation Mortgages (Future effective date 11/02/26) The requirements of this section apply to all Construction to Permanent Mortgages and Renovation Mortgages. Additionally, One-Time Close transactions must meet the requirements in Section 4602.2 and Two-Time Close transactions must meet the requirements in Section 4602.3. This section contains requirements related to: ■ Eligible Mortgages ■ Ineligible Mortgages ■ Eligible use of Interim Construction Financing proceeds ■ Permanent Financing proceeds ■ Eligible property ■ Borrower eligibility ■ Completion status of the Mortgaged Premises ■ Mortgage file documentation ■ Seller-Owned Modified Mortgages and Seller-Owned Converted Mortgages ■ Credit Fees

(a) Eligible Mortgages Mortgages must be First Lien Mortgages and may be any Mortgage Product or offering eligible under the Guide unless specifically described as ineligible in this section.

(b) Ineligible Mortgages The following Mortgages are ineligible as Construction to Permanent Mortgages and Renovation Mortgages: ■ Community Land Trust Mortgages ■ Government Mortgages ■ Mortgages secured by properties subject to income-based resale restrictions ■ Special purpose cash-out refinance Mortgages

(c) Eligible use of Interim Construction Financing proceeds For purchase transaction Mortgages, the proceeds of the Interim Construction Financing may be used as described in the table below: Eligible use of Interim Construction Financing proceeds Purchase transaction Construction to Permanent Mortgage Renovation Mortgage ■ Purchase the land or acquire a leasehold interest in the land ■ Pay construction costs ■ Pay costs for site preparation, including the removal of an existing Manufactured Home ■ For Mortgages secured by Manufactured Homes, acquire the Manufactured Home and pay construction costs, including costs to affix the Manufactured Home to a permanent foundation ■ Purchase the Mortgaged Premises ■ Pay renovation costs For refinance Mortgages, the proceeds of the Interim Construction Financing may be used as described in the table below: Eligible use of Interim Construction Financing proceeds Refinance transaction Construction to Permanent Mortgage Renovation Mortgage ■ Pay off any existing liens on the land ■ Pay construction costs ■ Pay costs for site preparation, including the removal of an existing Manufactured Home ■ For Mortgages secured by Manufactured Homes, acquire the Manufactured Home and pay construction costs, including costs to affix the Manufactured Home to a permanent foundation ■ Pay all Closing Costs ■ Pay off any existing liens on the land and on the improvements ■ Pay renovation costs ■ Pay all Closing Costs

(d) Permanent Financing proceeds Permanent Financing proceeds are used to replace Interim Construction Financing after construction or renovations are complete and must not be used for the purpose of making a single disbursement of funds to a builder or contractor or for the assumption of an existing Mortgage.

(e) Eligible property A Construction to Permanent Mortgage must be secured by: ■ A newly built or constructed 1- to 4-unit site-built home, or ■ A newly purchased Manufactured Home that has never been attached to a foundation A Renovation Mortgage must be secured by: ■ An existing 1-to 4-unit site-built home, or ■ An existing Manufactured Home that meets the general requirements in Section 5703.2 and the property eligibility requirements in Section 5703.3(a) Prior to the start of construction or renovation work, the Borrower must own the land or Mortgaged Premises in fee simple or have a leasehold estate meeting the requirements of Chapter 5704. The Borrower may have acquired the land through a purchase, inheritance, gift or legal award in accordance with a final judgment or decision from a legal body (e.g., court, jury, judge or arbitrator) such as in a case of divorce, separation or dissolution of a domestic partnership.

(f) Borrower eligibility The Borrower on the Permanent Financing must be the Borrower on, and obligated to repay, the Interim Construction Financing, and any other outstanding prior financing, including installation financing or outstanding prior Mortgages. Exceptions: ■ A Borrower may be omitted in the event of death or divorce ■ A Borrower who is a Related Person may be added, provided that all Borrowers on the Permanent Financing are owner-occupants of the Mortgaged Premises and considered in the underwriting of the Permanent Financing The builder/developer must not be obligated to repay the Interim Construction Financing or any Mortgage on the land or the improvements except when the builder/developer is the Borrower on the Permanent Financing and will occupy the Mortgaged Premises as their Primary Residence.

(g) Completion status of the Mortgaged Premises All improvements to the Mortgaged Premises must be fully completed before the Settlement Date, except for Mortgages meeting the requirements in Section 5601.3. For Manufactured Homes, the installation must be fully complete, including permanent utility connections and construction of any site-built improvements such as garages, decks, or porches, before the Settlement Date as evidenced by a satisfactory completion report. For both site-built homes and Manufactured Homes, the Seller must obtain documentation verifying completion in accordance with the requirements in Section 5605.9.

(h) Mortgage file documentation For Construction to Permanent Mortgages and Renovation Mortgages, the Mortgage file must include: ■ Documentation that supports classification of the Mortgage as a Construction to Permanent Mortgage or a Renovation Mortgage ■ Sufficient documentation (e.g., purchase contracts, plans and specifications, receipts, invoices, lien waivers) on which to validate the actual cost to construct or renovate the home ■ A document that clearly shows the Seller’s calculation of the purchase price and/or cost to construct ■ The Settlement/Closing Disclosure Statement or an alternative form required by law evidencing all costs to homebuyer and property seller for the Interim Construction Financing ■ The Settlement/Closing Disclosure Statement for the Permanent Financing ■ For a Mortgage secured by a Manufactured Home, the manufacturer’s invoice and the Manufactured Home Purchase Agreement

(i) Seller-Owned Modified Mortgages and Seller-Owned Converted Mortgages Seller-Owned Modified Mortgages and Seller-Owned Converted Mortgages (as described in Chapter 4402) may not be used to modify or convert Interim Construction Financing to Permanent Financing. After the Effective Date of Permanent Financing, if the terms of the Permanent Financing have been modified or if an ARM converted to a fixed-rate Mortgage, the resulting Mortgage is a Seller-Owned Modified Mortgage or Seller-Owned Converted Mortgage, as applicable, and must meet the requirements of Chapter 4402 and other provisions related to these Mortgages.

(j) Credit Fees The Seller must refer to Exhibit 19, Credit Fees, for Credit Fees related to Construction to Permanent Mortgages and Renovation Mortgages. Credit Fees are paid in accordance with the Credit Fee provisions stated in Chapter 6303.