New Fannie/Freddie Guidelines Coming May 1, 2023

[Jon Puente]

VERY important factors to consider for home buyers coming soon are the LLPA adjustments coming on Fannie/Freddie Conventional loans.  Here are some things to watch out for - 

1. Credit scores less than 679 with 5% down will be getting a nice decrease in upfront costs for par rates.

2. 720-760 credit scores with 15-20% down will be getting a big upfront cost increase for par rates. 

3. Other factors to include is that Second Homes and Investment properties, using Conventional loans, are typically 1%-1.5% higher than Primary Residence rates, regardless of credit score. You can put as little as 15% down on an investment property and 10% down on a second home, HOWEVER rates/costs become much more advantageous at 70%-75% LTV.

4. PMI on Conventional loans is MUCH less for higher credit scores, so even with 5% down, your PMI might not be as much as you think if you are 740+ credit.

I guess the point is to encourage people to become homeowners regardless of credit score and down payment, and basically level out the playing field from those who have 700+ credit scores with higher down payments.  

I am curious about your thoughts?