Having good credit will cost you

Fannie Mae and Freddie Mac will enact changes to fees known as loan-level price adjustments (LLPAs) on May 1 that will affect mortgages originating at private banks nationwide.

High-credit buyers with scores ranging from 680 to above 780 will see an increase in their mortgage costs – with applicants who place 15% to 20% down payment experiencing the biggest increase in fees.


Hi DrBob2!

Do I understand this correctly: the most desirable customers from a credit score and downpayment perspective will be getting penalized the most?

If so, why?


Well off people can borrow elsewhere.

The Fannie and Freddie programs, poor sallie, were meant for the less well off. Yet true to Orwellian form the well off are using them.

Because there are lots of them, and they can pay?


1 Like

It is what is called, I believe, cross-subsidization. People with poor credit scores will still pay more but not as much, and the difference will be paid by those with better scores.

Moral of the story: if you are planning on getting a mortgage in the near future then pay your credit card bills late for a while.


1 Like

Pretty sure they look at your income as well. Which is why they exist.

I get the rich just want to take and take. Ever think a lot of people are giving?

1 Like

Sure. It varies by county. In Connecticut, for example, the average income limit for a conforming loan last year was $112K. In Alabama it is lower. However, the credit score adjustment applies to all of the loans Fannie/Freddie buy (and so to the originators).


While you may pay a bigger ONE TIME FEE I find it also likely that you will have LOWER RATE for far longer if you have good credit vs bad - so probably not the wisest plan.

See page 2 and 3 of your link where a 780 credit score comes with no rate premium in most cases but a score below 700 adds 1% or more to the cost - for the life of the loan.


Did I misunderstand the chart you linked to? I see that the lower your credit score the higher your fees. No one is paying lower fees by having poorer credit.


Ah, that is true. As I wrote upthread, “People with poor credit scores will still pay more but not as much, and the difference will be paid by those with better scores.”


1 Like

Perhaps the cost differential associated with different credit scores has changed and everyone has been and continues to pay their fair share of the cost. Perhaps low scorers are still subsidizing high scorer but not as much as before. And maybe your conclusion that high scorers are increasingly subsidizing low scorers is correct. Without knowing the costs, it’s impossible to know who is subsidizing who.