Big Changes Investment and Vacation Homes

Mortgage and Lending with HomeBridge Financial Services (NJ) NMLS 248937

         Rates are climbing for both Investment and Vacation Home Mortgages

Earlier this month both Fannie and Freddie announced new limits on loans secured by second homes (vacation properties) and Investment properties. The Treasury Department along with the Federal Housing Finance Agency (FHFA) imposed additional risk criteria to these loan types and included a 7% limit for both second home and investment mortgages. (Effectively they want to see 93+% as primary residences) 

The initial Mortgagee letter puts some strict requirements for automated underwriting findings.  While not specifically mentioned, I wouldn't be surprised if we see DU and LP tighten up making it harder to get automated approvals on marginal loans. 

The industry as a whole expects to see significant changes to pricing on these loans already with additional Loan Level Price adjustments you can expect to see rates increase at least .25-.375% more in rate than we have seen in the past.

Previously we have had no add on at all for a secondary residence and investment properties were typically 0.5%- 0.75% higher in rate than a primary residence. The new LLPA will increase the add-ons that were already there, and in some cases we will see loans that will require points where the did not have points in the past.

The industry had very little notice on this move and it will effect new loans immediately since it is based on loan deliveries as of April 1, 2021.

It would be prudent to let your buyers be aware of this change so they are not blindsided by higher than anticipated rates and or points than they anticipated.

Call me for all your residential lending needs!


Robert Rauf 
Mortgage Loan Originator NMLS# 248937 
or my blog: 
Office: (732)908-4868  Cell (732)740-0175

Since 1987 I have been helping my clients fulfill their dream of home ownership! HomeBridge Financial Services, Formerly REMN, HomeBridge Financial Services is located at 9 Grand Ave, Building 2 Suite A Toms River, NJ 08753. NMLS #6521. New Jersey Licensed Lender and Mortgage Banker #L041053. Visit for more information. NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey, Toms River NJ 08753, Toms River NJ 08755, Brick NJ 08723, Brick NJ 08724 Mortgage in Ocean County NJ, Mortgage in Monmouth County NJ, Jackson NJ 08527, Howell NJ 07731, Lacey 08731 08734, Beachwood 08722 Bayville 08721, 

Comments (1)

Kristin Johnston - REALTOR®
RE/MAX Platinum - Waukesha, WI
Giving Back With Each Home Sold!

Great information.   Thanks for sharing and have a wonderful day!

Nov 12, 2021 07:08 AM