LLPAs

What are LLPAs?

Short answer

LLPAs (Loan-Level Price Adjustments) are price adjustments Fannie Mae and Freddie Mac apply based on credit score, LTV, occupancy, property type, and loan purpose. They show up as points or rate adjustments on the rate sheet and can swing pricing by 1-2%+ in equivalent rate.

Plain-English explanation

LLPAs are how Fannie/Freddie price for risk. The matrix has rows (LTV) and columns (credit score), with adjustments for non-owner occupancy, multi-unit, cash-out refinance, condo, and other risk factors. A 740 credit score borrower buying a primary residence with 10% down hits a small LLPA; a 680 credit borrower buying an investment property with 25% down hits a much larger one. The adjustment is paid as discount points (cash upfront) or absorbed into the rate (lender increases the rate to fund the points). Subject to current Fannie/Freddie LLPA matrices.

Practical example

A 720 credit, 95% LTV, primary-residence purchase might hit a 1.5-point LLPA; the same file at 760 credit and 80% LTV might hit 0.25 points. That's a real-money difference — at $400k, the difference is $5,000 in upfront cost or roughly 0.3% in rate equivalent.