Home loan

Initial fees on second home loans increase by $1.125

The Federal Housing Finance Agency (FHFA) today took action to meet one of the targets set out in its 2022 scorecard for Fannie Mae and Freddie Mac GSEs, announcing targeted upfront fee increases for certain high balance loans and GSE secondary residence.

High balance loans (called super conforming loans by Freddie Mac) are mortgages issued in certain designated areas that exceed the base conforming loan limit. This limit is set at $647,200 for 2022. Fees for these loans will increase between 0.25% and 0.75%, depending on the loan-to-value ratio. Initial fees for secondary home loans increase between 1.125% and 3.875%, also prioritized against loan-to-value.

The FHFA said the new fees would take effect for deliveries and acquisitions beginning April 1, 2022. The long lead time is intended to minimize market and pipeline disruptions.

To ensure that GSEs will continue to provide strong support for affordable housing, the pricing of certain programs, including HomeReady, Home Possible, HFA Preferred and HFA Advantage, will not be changed by the new fees. In addition, loans to first-time buyers in high-cost areas with incomes equal to or less than 100% of the area’s median income will not have a specific high-balance upfront fee.

“These targeted pricing changes will allow the Enterprises to better fulfill their mission of facilitating equitable and sustainable homeownership, while improving their regulatory capital over time,” said Acting Director Sandra L. Thompson. “Today’s action represents another step taken by the FHFA to strengthen the [GSEs’] security and solidity and guarantee access to credit for first-time buyers and low- and modest-income borrowers. »

Contributor’s point of view

The massive new prices for second homes are sure to have an impact on demand for second homes, as did the agency caps on second home/investment purchases last spring. Those limits were lifted in September, a hugely popular move that realtors, homebuyers and lenders all cheered. To say that the new high-balance loan fees won’t impact borrowers whose income is below the region’s median is cold comfort, as these borrowers are unlikely to qualify for high balance loans, regardless of price. If the FHFA doesn’t want second home loans, it should say so, rather than just imposing new high fees on them.


Mortgage banker, The Federal Savings Bank


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