Buying a second home with a conventional mortgage loan just got a lot more expensive

There will be significant rate increases taking effect April 1^st, 2022. This is not an early April Fool’s joke.

Fannie Mae and Freddie Mac are implementing new ways to help folks needing assistance with owning a home. I think it is a great idea. However, in order to get the funds to do these new programs the people that are buying 2^nd homes or have a high mortgage balance will be paying for the program.  The is will take effect on April 1^st 2022.

According to Fannie Mae and Freddie Mac, an increase on high balance loans of between 0.25% and 0.75% and a similar increase on second homes of between 1.125% and 3.875% will help to ensure that they will have the funds to better help lower-income home buyers.

By increasing the LLPAs on high-balance and second homes, it will provide the GSEs’ with a stable base that allows them to offer additional programs to help first-time or lower-income homebuyers.

In the press release announcing the change, FNMA Acting Director Sandra L. Thompson stated the purpose of the increase would help facilitate “equitable and sustainable access to homeownership”

According to Thompson “[The] action represents another step FHFA is taking to strengthen the Enterprises’ safety and soundness and to ensure access to credit for first-time home buyers and low- and moderate-income borrowers.”