FHFA Announces to Increase Upfront Fees Effective April 1, 2022

This is no April Fool’s joke. Beginning on April 1, 2022, upfront fees for high balance first time loans, along with second-home loans, are going to cost more. Reach out to me at (206) 778-2424 for help with navigating what this means to you and how I can help you. 

 

Here are the main points made in a statement made by the Federal Housing Financing Agency (FHFA):

1. first time high balance loans will be assessed a fee between 0.25% and 0.75%, tiered by loan-to-value (LTV) ratio.
2. Second home loan upfront fees will increase 1.125% and 3.875%. These loans will also be tiered by LTV ratio.

For context, King County’s conforming loan limit is currently $891,250.00. A loan amount larger than that number is considered a jumbo loan, or “high balance” loan. Most homes in King County sell for much higher than the conforming loan amount so these fees may affect many first-time home buyers.

 

There are some exemptions from this increase for first-time home buyers in King County:

 

• loans originated in specific affordable programs. Reach out to me about which programs and if you qualify.
• If you are a first-time home buyer and your income is below the median income of the area that you are buying in.

Sandra Thompson, FHFA Acting Director, delivered the FHFA’s reason for the hike: “The fee increases are another step FHFA is taking to both strengthen the government-sponsored enterprises’ safety and soundness, and ensure access to credit for first-time homebuyers and low- and moderate-income borrowers.”

 

The increase is also said to confront the actual ability to buy a home. Real estate is the best way to grow wealth, especially in a market where there is so much demand like King County. With the wealth and equity grown by already-home-owners, many are able to afford a second home with the intent to rent it out to renters, thus growing even more equity. The fee assessed to second home buyers is an attempt to curtail the second home buying market, making more housing available for first-time home buyers.

 

Please reach out to me with your questions at (206) 778-2424. I am happy to help and connect you with a trusted lender! Additionally, information such as numbers and amount in this post change over time. Be sure to reach out to me regarding the current loan amounts. Chat soon!