Freddie Mac Guidelines: Credit Fees for Super Conforming Mortgages

What Are Super Conforming Loans

Super conforming loans fill the gap between standard conforming loans and jumbo loans. In most areas, the 2024 conforming loan limit is $766,550. The super conforming limit reaches $1,149,825 in high-cost areas like parts of California, New York, and Hawaii.

Your loan falls into super conforming territory when it exceeds the standard limit but stays below the super conforming ceiling for your county. A $900,000 loan in San Francisco qualifies as super conforming. The same loan amount in Dallas would be a jumbo loan because Texas uses the standard conforming limit.

Fannie Mae treats these loans differently from standard conforming loans. They carry additional risk-based pricing adjustments that show up as credit fees at closing.

How Credit Fees Work

Credit fees represent Fannie Mae's way of pricing additional risk into super conforming loans. The fees compensate for the higher loan amounts and potentially greater loss exposure compared to standard conforming loans.

Your lender calculates the exact fee using Fannie Mae's Exhibit 19. This pricing matrix considers multiple factors that affect your loan's risk profile. A borrower with a 780 credit score and 25% down payment pays less than someone with a 680 score and 10% down.

The fee gets collected at closing as part of your closing costs. You cannot roll this fee into your loan amount or finance it separately. Plan to bring these funds to closing along with your down payment and other closing costs.

Factors That Determine Your Credit Fee

Your credit score plays the biggest role in determining your credit fee. Fannie Mae's pricing matrix shows higher fees for lower credit scores. A borrower with a 620 credit score faces significantly higher fees than someone with a 740 score on the same loan.

Your down payment percentage also affects the fee calculation. Loans with less than 20% down typically carry higher credit fees. The combination of a low down payment and lower credit score creates the highest fee scenario.

The loan-to-value ratio matters beyond just the down payment amount. A borrower putting 15% down on a $1 million purchase has a different risk profile than someone putting 15% down on a $800,000 purchase, even though both are super conforming loans.

Your debt-to-income ratio can trigger additional fees in some cases. High DTI ratios combined with other risk factors may push your credit fee higher than the base amount shown in the pricing matrix.

Required Documentation

Your lender needs the same documentation for a super conforming loan as any other conventional loan. The credit fee calculation happens behind the scenes using information already in your loan file.

You will see the credit fee itemized on your Loan Estimate and Closing Disclosure. The fee appears as a separate line item, not rolled into your interest rate or other charges. Review these documents carefully to understand the total cost impact.

Your lender should explain how they calculated your specific credit fee. Ask for a breakdown showing which factors contributed to your fee amount. This transparency helps you understand the pricing and verify accuracy.

Why These Fees Exist

Fannie Mae implemented credit fees for super conforming loans to manage portfolio risk. Higher loan amounts create greater potential losses if borrowers default. The fees help offset this increased exposure.

The risk-based pricing also reflects market realities. Super conforming loans compete with jumbo loans that carry higher interest rates. Credit fees allow Fannie Mae to offer competitive rates while still pricing for the additional risk.

These fees also help Fannie Mae maintain its government-sponsored enterprise mission. By carefully pricing risk, Fannie Mae can continue supporting homeownership while protecting taxpayers from excessive losses.

Common Issues and Complications

Credit fees can surprise borrowers who expect super conforming loans to price like standard conforming loans. The additional fees may push your total closing costs higher than anticipated. Factor these fees into your cash-to-close calculations early in the process.

Some borrowers try to avoid credit fees by structuring their loan differently. You might consider a smaller loan amount that falls under the standard conforming limit, then use a second mortgage or HELOC for the difference. This strategy can work but requires careful analysis of the total cost.

Credit fees can change between your initial loan estimate and closing if your loan details change. A lower appraisal that increases your loan-to-value ratio might trigger higher fees. Lock your loan terms early to avoid unwelcome surprises.

The interaction between credit fees and lender overlays can create confusion. Your lender might have additional requirements or pricing adjustments beyond Fannie Mae's base credit fees. Make sure you understand all fees and their sources.

Timing and Payment Requirements

Credit fees must be paid at closing according to the provisions in Chapter 6303 [[6303]]. You cannot defer these fees or add them to your monthly payment. The fees represent a one-time cost that becomes part of your total cash requirement at closing.

Your lender will include credit fees in your cash-to-close calculation on the Closing Disclosure. These fees typically cannot be covered by seller concessions beyond normal limits. Plan to bring these funds from your own resources.

Some borrowers ask about paying credit fees upfront to reduce their interest rate. This option generally is not available with super conforming loans. The credit fees represent risk-based pricing adjustments, not discount points that buy down your rate.

References

For the official guidelines, see 4603.7: Credit Fees for super conforming Mortgages in the Fannie Mae Selling Guide.