Tougher Credit Standards and Lower Cost PMI

These Fannie and Freddie low-down-payment loans do apply tougher credit standards than either FHA or VA, but their loan limits reach substantially higher. Also, borrowers whose credit scores reach 680 (possibly as low as 620) will probably pay less for private mortgage insurance with Fannie and Freddie loan programs than they would with FHA.

On the other hand, borrowers with FICO scores of less than 620 may find that FHA's mortgage insurance premiums (MIP) now fall below the premiums of the private insurers who guarantee Fannie and Freddie's low-down-payment mortgages (i.e., LTVs greater than 80 percent). You'll need to compare costs based on your specific situation. No firm conclusions apply because competition perpetually shifts the pricing landscape. Plus, your full range of underwriting Cs (Secret #40) can influence loan terms and costs.

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