Mar 09 2023

[NEW] Lower loan fees for first-time homebuyers


Changes to LLPAs are coming. Learn why these updates are so helpful to first-time homebuyers.

Big news for buyers: Fannie Mae and Freddie Mac have announced changes to Loan Level Price Adjustments (LLPAs) on Conventional Loans, going into effect May 1, 2023. First-time homebuyers who meet income requirements are most likely to benefit.

What are LLPAs? These risk-based loan fees are charged to a borrower based on factors like credit score, loan type, occupancy type, and others. LLPAs on a Conventional Loan can impact your mortgage rate—for better or worse. If you’re a homebuyer who qualifies for newly reduced or waived LLPAs, you could see significant savings.

The LLPAs charged by Fannie Mae and Freddie Mac affect Conventional Loans and will not impact FHA, VA, and some Jumbo and specialty products. Fannie Mae and Freddie Mac also don’t back Non-Conforming Loans.

How have LLPAs changed?

Here’s a quick synopsis:

  • Income: Fees will be waived for first-time homebuyers who earn less than or equal to 100 percent of the local median income.
  • Down payment: New fees will be charged for borrowers with 15 to 20 percent down payments.
  • HomeReady®/Home Possible®: Fees will be waived for buyers who qualify for Fannie Mae and Freddie Mac’s affordable housing programs.
  • Cash-out: Fees on many cash-out refinance loans will increase.
  • Multi-unit properties: Loan pricing for 2-4 unit properties will change.

As you might have noticed, these changes are geared toward supporting first-time and lower-income homebuyers. For many underserved buyers, lower loan fees may help to make the dream of homeownership possible. Loan fees are set to drop before summer, considered peak homebuying season, and could have a positive effect on the cooling housing market.

What does this mean for you?

If you’re already in the process of buying a house, these changes probably won’t impact you. 

But for those planning on buying soon, changes to LLPAs could play out in one of two ways:

  • You pay less. If you are a first-time homebuyer with low- to mid-income, this is likely to be the case. You may save on the cost of homeownership if you meet the criteria for fees to be waived.
  • You pay more. If you have a large down payment, you may be charged higher LLPAs. In this case, it may be worth purchasing before May 1 and/or contacting your local Academy Loan Officer to see if there are other ways you can save.

Need a local Loan Officer who cares about your homebuying experience as much as you do?

Here’s where to find one.

For those who have concerns about paying higher LLPAs, you have some options:

  • Ask for seller concessions. You can read all about this here. When a seller agrees to pay part of your closing costs, it can reduce the burden of higher LLPAs.
  • Look into other loan programs. Other programs might provide some savings. For example, mortgage insurance on FHA Loans has recently decreased, saving new homeowners an estimated $800 a year.

Your Academy Loan Officer can help you compare loans, count the cost, and determine which loan program makes the most sense for your financial situation.

Could you save with lower LLPAs?

Loan Level Pricing Adjustments may be waived if you make under a certain income threshold. This means that rates could be better than they were before the change. Contact your local Academy Loan Officer to find out if you benefit.

All mortgage products are subject to credit and property approval. Rates, program terms, and conditions are subject to change without notice. Not all products are available in all states or for all amounts. Additional conditions, qualifications, and restrictions may apply. Please contact Academy Mortgage for more information. MAC324-1485866.