New change in Mortgage Fees based on Credit Score

Starting May 1st, a new program will be implemented to help home buyers with low credit scores get a home loan. The fees on mortgages backed by Freddie Mac and Fanny Mac will change, with a plan designed to make home ownership more affordable for more people. The fees will decrease for many people with lower credit scores and increase slightly for people with higher credit scores.

Lenders consider many variables when determining the cost of a home loan, including the type of property, down payment, and credit score. Having a lower credit score will now come with less of a penalty for those with lower scores, but this doesn’t mean that people with lower credit scores will pay less than those with higher credit scores.


A buyer with 20% down payment and a credit score of 640 would see their fee drop by 0.75% from 3% to about 2.25%.

On the other hand, another buyer with a higher credit score putting 20% down would see their fee climb by about a quarter percent, from 0.5% to about 0.875%.

This means the cost could equate to about $4,000 more for a buyer with a better credit score. However, this only affects the upfront closing fees and not the interest rate or overall monthly payment. People with higher credit scores will still have a lower monthly payment overall, but the upfront cost will be a bit more.

The intent of this program is to encourage more people with low credit scores to get into the home market and help people open the door. While there may be some controversy over the changes, it is a great opportunity for people with poor credit scores. It is not worth damaging one’s credit score to get those fees. It is important to seek advice and be aware of the details. If you have any questions, reach out to a good lender.

In conclusion, the changes in mortgage fees based on credit score will make home ownership more affordable for more people. Although the changes are controversial, they provide an opportunity for people with low credit scores to get into the home market. It is essential to understand the details and seek advice from experts.

Tune into the video below as Michele and John dig into this article and topic a little more!