Facts, Not Headlines: Understanding the New Loan Level Price Adjustments

marketingdept • June 18, 2025

Share this article

Facts, Not Headlines: Understanding the New Loan Level Price Adjustments

Starting May 1, upfront fees for loans backed by Fannie Mae and Freddie Mac will see changes in the Loan Level Price Adjustments (LLPAs). This revision has prompted misleading and often incorrect reporting, so let’s review the facts.  

What Are Loan Level Price Adjustments (LLPAs)? 

LLPAs refer to fees that are based on a borrower's credit score, down payment, and more. When a mortgage lender sells a loan to Fannie Mae or Freddie Mac, the price the agency pays for the loan is adjusted by the amount of the LLPAs.   If greater risk is associated with the loan, such as a higher loan to value (LTV) or a lower FICO score, the greater the LLPAs.   

Understanding the Effect of LLPAs 

An LLPA may or may not change the interest rate of the loan- it depends on the amount of the LLPA. The LLPA affects the sale price of the loan, not the interest rate. Typically, the correlation between an LLPA and the rate is around 4 to 1.    For example, an LLPA of .50% would most likely lead to an increase of the interest rate of .125%, but an LLPA of .125% may be not significant enough for a lender to change their rate.  

May 1, 2023 Update for LLPAs 

Fannie Mae and Freddie Mac are adjusting their matrices for LLPAs. These adjustments will ease penalties for borrowers with lower credit scores.   The matrix also includes additional levels for the highest scores. The previous matrix capped out at 740, whereas the new matrix organizes higher scores into three levels: 750-759, 760-779, and 780 or above.    For example, prior to May 1st, someone with a 741 FICO score would have been at the top of the matrix. But with the new revision, a FICO score of 780 is required to be at the top of the matrix, while the person with a 741 FICO score is now in the third highest grouping, and may have greater LLPA’s at certain LTVs as a result.   

Borrowers With Lower Credit Scores Will Not See Lower Rates Than Borrowers With Higher Scores

Below is the matrix for purchase loans that goes into effect on May 1, 2023. LLPAs increase with higher LTVs and lower FICO scores with a few exceptions.

Full matrix can be viewed here: https://singlefamily.fanniemae.com/media/9391/display   Some things to note:   
  • Loans above an 80 LTV require Private Mortgage Insurance (PMI), making them less risky than loans that are not insured.
  • Loans above a 95 LTV are priced slightly better than loans with a 95 LTV. This is because only first-time homebuyers are eligible for loans above a 95 LTV. 
  • First-time homebuyers that meet certain income limitations are eligible to waive all LLPAs as part of an incentive to increase homeownership across the country.
 

Closing Thoughts

The FHFA, which oversees the federally-backed home mortgage companies Fannie Mae and Freddie Mac, has historically sought to present consumers with more affordable housing options.   

Recent Posts

September 17, 2025
As interest rates are trending downward, this shift is opening the door to new opportunities to lower monthly payments, consolidate debt, or tap into home equity.
September 8, 2025
In March 2026, the Homebuyers Privacy Protection Act will put an end to the unwanted solicitations many buyers receive after submitting a mortgage application.
September 3, 2025
Back-to-school season is here. Many Gen Z students are benefitting from a part-time job during the school year.
August 27, 2025
Mortgage strategies for retirement planning, including refinancing for retirement and more.
August 21, 2025
Refinances currently account for 46.5% of all mortgage activity. Is your home loan working for you? More homeowners are taking a strategic, big-picture approach to their finances—and home equity is playing a big role in that shift. With high-interest debt, rising living costs, and growing home equity balances, many of
August 14, 2025
Your down payment doesn't need to be a dealbreaker. Whether through local down payment assistance programs or federal loan options like FHA, VA, or USDA loans, there are multiple paths to affordable homeownership in 2025.
August 7, 2025
Looking to buy a new home before selling your current one? Most people think of a HELOC as a second mortgage or a way to tap into equity of your current home; however, another strategy for HELOCs is to use it as a bridge loan to secure a new home before selling your current one.
By marketingdept July 15, 2025
Buy Now, Sell Later: Qualifying for a New Home Without Selling Your Current One
July 1, 2025
To help you understand the buying process, we’ve broken it down into seven common steps The process can vary slightly from one person to the next, due to the many variables that are involved But it usually goes something like this
By marketingdept June 24, 2025
The Value Assurance program is a new and effective way to beat cash offers and increase your odds of getting your bid accepted without accumulating additional financial risk.
Show More