What is the new mortgage rule May 1 2023?
Under a new rule from the Federal Housing Finance Agency (FHFA), which took effect on May 1st, borrowers with lower credit ratings and less money for a down payment will qualify for better mortgage rates, while those with higher ratings will pay increased fees.
The changes to LLPAs included the addition of higher credit tiers and lower LLPAs for homebuyers making low down payments. While a 740 or higher FICO score could previously get you the best mortgage rate, you now need a score of 780 or higher to get the lowest rates.
On May 1, 2023, the Federal Housing Finance Agency (FHFA) implemented misguided changes to the Loan Level Pricing Adjustments (LLPA), which are one-time, upfront fees charged to lenders when Fannie Mae and Freddie Mac (GSE's) purchase their loans.
The revised LLPA pricing structure increases fees for many borrowers with high credit scores (680 and above) and reduces fees for most borrowers with a score lower than 680. The biggest increase affects borrowers with a credit score of 680 or higher who make a 15-20% downpayment.
Starting May 1, 2023, some borrowers will pay more for their mortgages thanks to a new rule from the Federal Housing Finance Agency regarding loan-level price adjustments, or LLPAs. The changes will update the current fee structure on the majority of loans originated by mortgage lenders in the US.
Starting May 1, a new schedule of upfront fees applies to mortgages backed by Fannie Mae and Freddie Mac. The new fees will increase costs to borrowers overall by 0.04 percentage point, according to the FHFA. That means a borrower who would have paid a 6.5 percent APR under the old fees would pay 6.54 percent now.
Senate Bill 834 would enact the California Family Home Construction and Homeownership Bond Act of 2023. The bill allows the California Housing Finance Agency to offer two financing programs – a down payment assistance for homebuyers and infrastructure loans for upfront construction costs.
Property taxes and property reassessment
For example, home renovation projects that expand square footage can increase your property's value and then increase your property taxes. The property taxes you pay can also increase due to a change in tax rates at local or state municipalities.
- Funding and tax credits. Up to $811 million for affordable housing programs.
- Tax incentives. ...
- Land use tools & role of local government. ...
- Publicly-owned land. ...
- State housing strategy.
Authorizes counties and municipalities to offer, through ordinance, an ad valorem tax exemption to property owners who dedicate units for affordable housing for households earning 60 percent of the AMI or less.
What is a good credit score for a mortgage?
Some types of mortgages have specific minimum credit score requirements. A conventional loan requires a credit score of at least 620, but it's ideal to have a score of 740 or above, which could allow you to make a lower down payment, get a more attractive interest rate and save on private mortgage insurance.
FHA loan limits increase most years, and 2023 was no different. For this year, the FH floor — the cap in most housing markets — increased from $420,680 to $472,030, a 12% increase. The ceiling limit in high-cost markets also increased considerably, jumping from $970,800 in 2022 to $1,089,300.
Maximum DTI Ratios
For manually underwritten loans, Fannie Mae's maximum total DTI ratio is 36% of the borrower's stable monthly income. The maximum can be exceeded up to 45% if the borrower meets the credit score and reserve requirements reflected in the Eligibility Matrix.
3-30-10 Rule For Buying A House
If you really want to keep your personal finances easy to manage don't buy a house for more than three times(3X) your income. If your household income is $120,000 then you shouldn't be buying a house for more than a $360,000 list price. This is the price cap, not the starting point.
First-time homebuyers with high credit scores would pay more under this new rule. Before May 1, if you have a credit score of 740 or higher, on a $500,000 loan, you would pay a fee of 0.25%, which is $1,250. After that date, you could pay as much as 0.375% - or $1,875 - on that same loan.
The 28/36 rule dictates that you spend no more than 28 percent of your gross monthly income on housing costs and no more than 36 percent on all of your debt combined, including those housing costs.
Higher minimum credit score: Borrowers with a credit score under 620 won't be able to qualify. This is often a higher bar than government-backed loans. Higher costs for certain property types and nonoccupying borrowers.
FHA loans require the borrower to live in the home as their primary residence, so they can't invest in or flip properties. With conventional loans, individuals can buy a variety of property types including private homes, investment properties and vacation houses.
Down payment: While 20 percent down is the standard, many fixed-rate conventional loans for a primary residence allow for a down payment as small as 3 percent or 5 percent. Private mortgage insurance (PMI): If you put down less than 20 percent, you'll have to pay PMI, an additional fee added to your payments.
Unlike lead generation websites, we do not sell your information to multiple lenders or third-party companies. FHA Loan Limits 2023 California is $472,030 and goes up to $1,089,300 for high-cost counties for one-unit properties.
What is the highest mortgage rate 2023?
| New Purchase Loan Type | 2023 Low Average | 2023 High Average |
|---|---|---|
| 30-year fixed | 6.11% | 8.45% |
| FHA 30-year fixed | 6.03% | 8.30% |
| 15-year fixed | 5.40% | 7.52% |
| Jumbo 30-year fixed | 5.23% | 7.59% |
Mortgage rates fluctuated significantly in 2023, with the average 30-year fixed rate going as low as 6.09% on Feb. 2 and as high as 7.79% on Oct. 26, according to Freddie Mac.
If you pay $200 extra a month towards principal, you can cut your loan term by more than 8 years and reduce the interest paid by more than $44,000. Another way to pay down your mortgage in less time is to make half-monthly payments every 2 weeks, instead of 1 full monthly payment.
Escrow payments usually go up due to increasing insurance costs or taxes. If you opt to add an escrow account later in your mortgage term, it may involve additional fees to set up and manage the account. Fortunately, the cost to set up and manage the account shouldn't exceed one-sixth of your annual escrow payments.
Requirements: Counties and municipalities must now allow multifamily or mixed-use residential developments to be built in commercial, industrial or mixed-use zones if the proposed rental development provides at least 40% affordable housing units for a period of at least 30 years.
