FHFA Announces Significant Changes

Happy New Year! FHFA (who oversees Fannie Mae and Freddie Mac) made a pretty significant announcement today, but it doesn’t technically roll out until April 1st. They announced that there will be a big pricing adjustment to both second home purchases and high balance loans.

Second Home Purchases

There are three ways to buy a home:

1. A primary residence
2. A second/vacation home (not getting any rent)
3. Investment or rental house

Historically, the rate pricing is pretty much the same for both primary and secondary homes. After April 1st, this is changing. They will be priced more in line with an investment property. You will still be able to put a little less down, but the rate will be at least half or three-quarters of a point higher.

High Balance Loans

The other notable change affects high balance loans. The current national limit is $647,000, which means that you can get a conventional loan up to that amount. For certain high-cost areas, such as Southern California, there are high-cost limits that go up over $900,000 (in LA and Orange County). So, there is a range up to the location-specific limit.

Those are considered high-balance loans. There will be an adjustment to these loans as well. They will still be available, but it will come at a higher rate. The good news is that some of the jumbo lenders are offering better pricing than conventional loans, so you have options. It might make more sense to use a jumbo loan, especially if you are putting 10% or more down.

Timing to Buy a Second Home

For more information about this announcement, you can view the update on the FHFA website.

We’ll help you compare all the options to find the best deal for your needs. If you have a second home purchase planned, then it might be a good idea to get that done in the next few months before the interest rates go up.

Reach out if you have questions or need more information about buying a home or refinancing your current property. At Franklin Loan Center, we are always here to assist.