New Mortgage Rule Aims To Punish Good Credit

Mortgage rule
This new mortgage rule will actually make responsible savers potentially pay more for their loan.

As if the housing market didn’t already have enough challenges these days, there is now a new mortgage rule set to take effect on May 1, 2023. In yet another effort by the Biden administration to redistribute wealth in America, a new rule will raise mortgage fees for borrowers with good credit and a solid down payment in order to subsidize higher-risk borrowers for loans associated with federal mortgage associations Fannie Mae and Freddie Mac. Yes, you read that correctly. In other words, a home buyer with a credit score over 740 would have to pay a surcharge of approximately $40 per month on a $400,000 loan. This would equate to an additional $480 per year and $14,400 over a 30-year period.

New mortgage rule

Beginning on May 1, 2023, upfront fees for loans backed by Fannie Mae and Freddie Mac will be adjusted because of changes in the Loan Level Price Adjustments (LLPA’s). LLPA’s are fees that vary from borrower to borrower based on their credit scores, down payment size, types of home, and more. The changes relate to credit scores and down payment sizes. 

A buyer with a sterling credit score of 740 and a 15% – 20% down payment will face a 1% surcharge on their loan. Meanwhile, a buyer with a credit score of 679 or lower and a down payment of 5% or even less will get a 1.75% fee discount.


David Stevens, a former commissioner of the Federal Housing Administration during the Obama administration, was quoted as follows: “This confusing approach won’t work, and more importantly, couldn’t come at a worse time for an industry struggling to get back on its feet after these past 12 months.” While we are in favor of developing programs to encourage home ownership, doing this at the expense of responsible home buyers with good credit is not the answer.

Are you looking to buy or sell property in South Florida? We can help! Contact Natasha at Live South Florida Realty, Inc. today! Now more than ever it is important to have professional guidance with your real estate transactions. In addition, be sure to download the free Florida Home Search app as well!

By natasha moore

REALTOR® with Live South Florida Realty, Inc.