First Home Advantage
Today we introduced the First Home Advantage loan product, which improves pricing of loans for eligible buyers, mostly for but not just limited to first time buyers.
Fannie Mae and Freddie Mac, entities of the federal government, removed loan level pricing adjustments (LLPAs) on all Home Ready loans and also on loans where at least one borrower is a first time buyer, and the total income is under the income cap.
That income cap in the DMV in 2023 (DC and the counties that surround it and are nearby) is $180,480. The income limit varies by geographic area and is either 100% or 120% of area median income. The cap in Baltimore and the counties nearby it is for example $121,700.
This change eliminates pricing adjustments based on credit score, property type, and utilizing secondary financing.
The amount of the benefit the impact will bring will vary. A sample home buyer with a 699 credit score buying a condominium, and eligible for the LLPA waiver, will save 2.5 points on their loan.
See the official announcement here: https://singlefamily.fanniemae.com/media/32386/display
For helpful context on why they made this change, I recommend reading this article: https://www.cnn.com/2022/11/03/homes/first-time-homebuyers-hit-record-low-nar-report. Recently, as this linked article from CNN explains, first time buyers are a significantly lower portion of the overall market of home buyers. A major reason for this is challenges with affordability. First Home Advantage, thanks to the recent changes from Fannie Mae and Freddie Mac, will be helpful to them.
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