The Federal Housing Finance Agency (FHFA) has announced new upfront fees for second-home loans, which will make purchasing an investment property or a second home more expensive. Based on the loan-to-value ratio, the new fee increases for second-home loans will range between 1.125 percent and 3.875 percent. This is a step towards ensuring equitable and sustainable access to homeownership for first-time buyers, low- and moderate-income buyers, and to improve its regulatory capital position over time. These rates will take effect on April 1.
If you’re planning to buy a second home, it’s a good idea to seek advice on how these fees will impact your purchase. Buying a second home is generally considered a luxury purchase, and saving up for it has never been more critical than now. With the new fee increases, it will be more difficult for buyers who want to do an 80 percent (i.e., 20 percent down), 85 percent, or 90 percent purchase of a second home.
In conclusion, understanding the impact of the new fees is essential for anyone looking to buy a vacation home or investment property. It’s also important to save up for your second home purchase, as the new fee increases will make it more difficult to get financing.