--- title: Fannie Mae and Freddie Mac’s Controversial New Mortgage Fee, Explained description: A new fee structure for government-backed loans could be a barrier to homeownership for many middle-class Americans. authors: - name: Leslie Cook role: Editor, Real Estate url: https://money.com/author/leslie-cook/ bio: Leslie Cook is Money’s lead real estate editor covering trends in the housing market, mortgage rates and real estate. She also writes about home renovation trends and tips. education: Bryn Mawr College, BA History certifications: Certified Personal Finance Counselor at_money_since: 2019 articles: 798 covers: - Mortgages - Banking - Credit - Economy and Politics - Housing - Identity Theft - Insurance - Loans - Personal Finance - Professional Services - Retirement - Taxes social: - https://twitter.com/LeslieLCook - https://www.linkedin.com/in/leslie-cook-9829b9198/ editors: - name: Kristen Bahler role: Managing Editor url: https://money.com/author/kristen-bahler/ bio: Kristen Bahler has spent more than a decade turning culture, work and consumer spending trends into conversation-driving stories. Today, she leads Money's sponsored content channel and reader-favorite franchises like Best Places to Live and Best Places to Travel. education: Northeastern University, MA Journalism at_money_since: 2016 articles: 52 covers: - Mortgages - Banking - Business - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology social: - https://www.linkedin.com/in/kristen-bahler/ published: '2023-05-04T11:00:13.000Z' section: Mortgages tags: - mortgages - News word_count: 523 canonical: https://money.com/fannie-mae-freddie-mac-new-mortgage-fee/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We may earn a fee if you click on the links below. Compensation does not determine ranking. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Young female real estate agent talking with a client in the bedroom of house for sale](https://img.money.com/2023/05/Mortgage-Fee-For-Homebuyers-Good-Credit.jpg) Closing on a mortgage just got a little more expensive for a lot of homebuyers. The Federal Housing Finance Agency (FHFA) implemented changes Monday to the fee structure of conventional mortgages guaranteed by Fannie Mae and Freddie Mac, effectively lowering the fee gap between borrowers with high credit scores and those with low ones. The change is part of a government initiative to make homeownership more affordable to underserved communities and first-time homebuyers, but critics say it disadvantages middle-income borrowers who are more financially prepared to buy a house — and less risky to lend to. On May 1, the day the new fee structure went into effect, a group of financial officials representing 27 U.S. states [sent a letter](https://www.patreasury.gov/pdf/newsroom/2023-05-01-President-Biden-FHFA-Mortgage-Fees.pdf) to President Joe Biden and FHFA director Sandra Thompson asking for it to be scrapped. While low-income borrowers and those with credit scores below 680, as well as first-time homebuyers, will likely see lower monthly costs going forward, the changes could also make it harder for borrowers with good — but not great — credit and income to purchase a home. Fees also increased for borrowers who make larger down payments, those who apply for a cash-out refinance and those who buy a second home. ## Shopping for a new home? Find out how much you can afford today. ### Mortgage Experts at Rocket Mortgage (NMLS #3030) are available to get you started on your home-buying journey with solid advice and priceless information. To find out more, click on your state today. [View Rates](https://money.com/pr/u1bd42af4e5f?ap_referrer=%2Ffannie-mae-freddie-mac-new-mortgage-fee%2F) “The hope is that this helps ease the affordability crisis in this country,” Bess Freedman, chief executive officer at New York brokerage Brown Harris Stevens, says. Still, she adds, “hearing that one may be in essence punished for having good credit could pose yet another psychological and financial barrier,” to homeownership. "There is already a lot of fear about making any big purchase in this environment, Freedman says. There are a number of variables at play, including individual borrowers' loan type and loan-to-value ratio. But in a nutshell: the higher your score and the bigger your down payment, the more you may have to pay. Under the new fee structure, a borrower with a 740 credit score and a 15% down payment would pay 1% in fees. On a $350,000 loan, that comes out to $3,500 on top of the loan balance. Under the previous fee schedule, the same borrower would pay a 0.2500 fee, or $875. FHFA fees, also called loan level pricing adjustment (LLPA) fees, have been a part of conventional loan lending since 2008, and are designed to ensure the “stability and soundness” of Fannie Mae and Freddie Mac, two U.S. government-sponsored mortgage companies. They're referred to colloquially as "upfront fees," though in practice, their cost is usually baked into the interest rates homebuyers pay, and consequently, their mortgage payments. Homebuyers with good credit still pay less than “riskier” borrowers under the new structure, according to Genevieve Dukes, head of mortgage partnerships at the online real estate firm Opendoor. But for middle-income buyers, many of whom are already struggling in today’s high-interest rate environment, “this could reduce affordability … at a time of instability,” she says. ## Don't have the 20% down? No worries! ### With an FHA loan from Quick Loans (NMLS #3030), you can purchase your first home with a down payment as low as 3.5%. Click below to see if you qualify today! [Get Started](https://money.com/pr/f9c368dd2718?ap_referrer=%2Ffannie-mae-freddie-mac-new-mortgage-fee%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/fannie-mae-freddie-mac-new-mortgage-fee/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Mortgages", "item": "https://money.com/mortgages/" }, { "@type": "ListItem", "position": 3, "name": "Mortgage Rates", "item": "https://money.com/mortgage-rates/" }, { "@type": "ListItem", "position": 4, "name": "Fannie Mae and Freddie Mac’s Controversial New Mortgage Fee, Explained" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/fannie-mae-freddie-mac-new-mortgage-fee/#webpage", "url": "https://money.com/fannie-mae-freddie-mac-new-mortgage-fee/", "name": "Fannie Mae and Freddie Mac’s Controversial New Mortgage Fee, Explained", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2023-05-04T11:00:13.000Z", "mainEntity": { "@id": "https://money.com/fannie-mae-freddie-mac-new-mortgage-fee/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/fannie-mae-freddie-mac-new-mortgage-fee/#breadcrumb" } }, { "@type": "NewsArticle", "headline": "Fannie Mae and Freddie Mac’s Controversial New Mortgage Fee, Explained", "articleSection": "Mortgages", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2023/05/Mortgage-Fee-For-Homebuyers-Good-Credit.jpg", "width": 3680, "height": 2456, "caption": "Mortgage-Fee-For-Homebuyers-Good-Credit" } ], "author": [ { "@type": "Person", "name": "Leslie Cook", "url": "https://money.com/author/leslie-cook/", "@id": "https://money.com/author/leslie-cook/#author", "description": "Leslie Cook is Money’s lead real estate editor covering trends in the housing market, mortgage rates and real estate. 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