BREAKING NEWS: FHFA Rescinds the DTI Price Hit (LLPA)

The Federal Housing Finance Agency (FHFA) announced earlier today that it is rescinding the debt-to-income (DTI) loan level price hit adjustment (LLPA) that was announced in January of this year. Previously, people with a debt-to-income ratio higher than 40% with a loan-to-value greater than 60% would have an additional price hit to their interest rate. This price hit makes it even more challenging for someone who is pushing the DTI limit to remain under the 40% number to avoid having either a higher rate or paying more for the same rate because of the LLPA. The additional price hit for DTI ranged from 0.25%-0.375% depending on the loan to value/how much equity is in the transaction. On a $400,000 loan, this would be an additional cost of $1,000 to $1,500 if paid as “points” instead of having it priced into the interest rate.

It appears that the FHFA is currently keeping the other controversial price adjustments that were announced at that time where people with better credit scores may have slightly higher pricing and those with less than stellar credit may have improved pricing as compared to before the LLPA adjustment. Those with better credit scores will still have better pricing than those without better credit, many feel that the benefit to those with lower credit scores is at the cost of those who have higher credit scores.

Bottom line, this is good news! I’m glad to see this revision for conforming mortgages.

If you’re considering buying or refinancing your home, please reach out to me. I am happy to help you.

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