Key Takeaways
- First-time buyers get automatic rate discounts with conventional loans.
- Eligible buyers enjoy rates up to 1.75% lower than standard.
- No LLPAs mean your credit score won't raise your rate.
- Income must be below the area's median to qualify.
Article Summary
The FHFA mortgage rate discount is an automatic rate reduction for first-time home buyers who use conventional mortgages. The discount varies based on your credit score and down payment, typically ranging from 0.25% to 0.375% off your interest rate. Use our [LLPA calculator](/tools/llpa-calculator) to see how your credit score and down payment affect your loan pricing.
FHFA Mortgage Rate Discount Overview
The Federal Housing Finance Agency (FHFA) is continuing its automatic mortgage rate discount in 2025 for eligible first-time buyers who finance their home with a conventional mortgage.
This post covers the details of the FHFA First-Time Home Buyer Mortgage Rate Discount program, who's eligible, and other available mortgage discounts for first-time buyers.
How the FHFA Mortgage Rate Discount Works
The FHFA Mortgage Rate Discount waives loan-level pricing adjustments (LLPAs) on conventional mortgages made to first-time buyers.
LLPAs are small interest rate adjustments based on a buyer's credit profile. Along with broader factors like inflation rates and U.S. housing trends, LLPAs explain why different buyers may receive different mortgage rate quotes from the same lenders.
Eight key factors can affect conventional mortgage rates through LLPAs:
- Credit score
- Down payment amount
- Loan-to-value ratio
- Property type
- Loan term
- Cash-out refinance
- Debt-to-income ratio
- Loan purpose
With the FHFA First-Time Home Buyer Mortgage Rate Discount, there are no LLPA micro-adjustments. This can result in mortgage rates up to 1.75 percentage points lower for eligible buyers.
FHFA First-Time Home Buyer Mortgage Rate Discount
| Credit Score | Down Payment | Loan Type | Mortgage Rate Discount |
|---|---|---|---|
| 620 | 3% | Fixed | 1.75% |
| 640 | 3% | Fixed | 1.50% |
| 660 | 3% | Fixed | 1.25% |
| 680 | 3% | Fixed | 0.50% |
| 700 | 3% | Fixed | 0.50% |
| 720 | 3% | Fixed | 0.25% |
| 740 | 3% | Fixed | 0.25% |
| 760 | 3% | Fixed | 0.25% |
Assumptions: 50 bps loan-level pricing adjustment ~ 0.25% mortgage rate Source: Fannie Mae LLPA Matrix
Who Qualifies for the FHFA First-Time Home Buyer Mortgage Rate Discount
Eligible buyers automatically receive the FHFA First-Time Home Buyer Mortgage Rate Discount. There is no separate application or additional qualification process.
Here are the five key qualifying criteria:
You must be a first-time buyer
The definition of a first-time buyer is any person who has not owned their primary home in the past three years. Exceptions may apply to displaced homemakers or single parents if their previous residence was jointly owned with a spouse, and they owned no other properties.
Your home must be your primary residence
The FHFA mortgage rate discount applies only to primary residences, meaning the buyer must live in the home more than 180 days per year and use its address as their official residence. Vacation homes, and short- and long-term rentals are not eligible.
You must move in within 60 days of closing
Home buyers must occupy the home within 60 days of closing. If repairs are needed before moving in, the home must still be habitable within this timeframe. Exceptions are made for deployed active-duty military members.
You must be a low- or middle-income wage earner
The FHFA restricts its discount to low- and middle-income earners. To qualify, the buyer's income must be below the area median income, with some exceptions in high-cost areas.
Use the calculator below to see if your income qualifies for an LLPA waiver.
Check AMI Income Limits for LLPA Waiver
Enter any U.S. property address to see its AMI Income limit.
You must use a conventional loan
The FHFA governs Fannie Mae and Freddie Mac, so the discount applies to conventional mortgages. It is unavailable for buyers using FHA, VA, or USDA loans.
Common Questions About the FHFA First-Time Home Buyer Mortgage Rate Discount
Get answers to frequently asked questions about the FHFA mortgage rate discount program.
How do I apply for the FHFA mortgage rate discount?
There is no application process. Eligible first-time buyers automatically receive the FHFA mortgage rate discount when using a conventional mortgage.
Am I eligible as a first-time buyer if my spouse owned a home previously?
The FHFA's definition of a first-time buyer requires that neither applicant on the mortgage have owned a home within the past three years. If a spouse is included on the mortgage and has owned a home recently, the discount cannot be applied.
Am I eligible for the program if I'm buying a mobile home?
Yes, buyers of mobile homes can still qualify for the FHFA First-Time Home Buyer Mortgage Rate Discount.
Does the discount apply if I'm currently closing on a home?
Yes, the discount applies to loans that close on or after December 1, 2022. Since today is <CurrentDate />, the discount applies to your closing if it occurs on or after that date.
When will the FHFA mortgage rate discount program become law?
The FHFA is a government agency and does not require Congressional approval to enact its programs. As such, the discount program has been in effect since December 1, 2022.
Does the FHFA mortgage rate discount remove guarantee fees?
No, the FHFA discount does not eliminate guarantee fees (g-fees), which cover administrative costs associated with servicing the loan.
