How do LLPAs (risk-based pricing adjustments) affect conventional rates and fees?

How do LLPAs affect my mortgage rate?

You want to know how loan-level price adjustments affect your conventional mortgage rate and closing costs. LLPAs add or subtract from your base interest rate based on factors like credit score, down payment, loan amount, and property type. Fannie Mae and Freddie Mac use these adjustments to price risk on conventional loans they purchase from lenders. Your lender applies the LLPA to determine your final rate and fees.

Common adjustments range from rate reductions for high credit scores and large down payments to rate increases for lower credit scores, smaller down payments, or cash-out refinances. Investment properties and second homes typically carry higher adjustments than primary residences. Check your Loan Estimate to see how LLPAs affect your specific loan. The rate shown reflects your base rate plus any applicable adjustments. Compare the Annual Percentage Rate between lenders since LLPAs are standardized across conventional loans, but lenders may structure their pricing differently. Ask your loan officer to explain which adjustments apply to your loan and how different scenarios might change your rate.