Fannie Mae is reconsidering the the risk involved in lending to homeowners with lower credit again. Almost across the board it will become more expensive for borrowers who do not have close to perfect credit. The expense will either come in the form of higher interest rates or higher closing costs.
Both Fannie Mae and Freddie Mac are constantly adjusting guidelines and pricing to keep up with the changing market, however these changes seem very stringent. After April 1st 2011 a borrower with a fico score of over 740 will be penalized for not having enough down payment or equity. A fico score of 720-739 will now cost a new home buyer .5% of their loan amount ($1,000 on a $200,000 loan amount) unless they have 25% down payment. The LLPA (Loan Level Pricing Adjustments) will double in most cases for a borrower who has a score of 700-719.
It is amazing the added expense that has been added to conventional loans over the last few years. Not long ago, every borrower received the same rate on a conventional loan regardless of credit score or down payment. Now it will cost you several thousand dollars for not having perfect and I mean PERFECT credit.