Learning Objectives
- State Fannie/Freddie minimum FICO requirements
- Explain LLPA pricing tiers and how they punish low scores
- Describe PMI cost movement across FICO bands
- List Conventional waiting periods after derogatory events
Minimum Scores
- Fannie Mae / Freddie Mac — 620 minimum
- HomeReady / Home Possible (low income) — 620 minimum, better pricing
- Investment & second home — typically 680+
LLPAs — Why 20 Points Matters
Fannie and Freddie add price adjustments based on FICO and loan-to-value. Each LLPA is paid as a one-time fee or rolled into the rate. A 20-point FICO jump (e.g. 679 → 700) can save the buyer thousands of dollars over the life of the loan.
Waiting Periods
- Chapter 7 — 4 years from discharge
- Chapter 13 — 2 years from discharge / 4 years from dismissal
- Foreclosure — 7 years (3 years with extenuating circumstances + 10% down)
- Short sale — 4 years
Key Takeaways
- Conventional minimum is 620, but pricing breaks at 680, 700, 720, 740, 760.
- Each 20-point band can change rate and PMI materially.
- Conventional seasoning is the strictest of the four agency programs.
End-of-Module Exam
Module 4 Exam — 5 questions
Pick the best answer for each question. Pass with 80% or higher to mark this module complete.
- 1.
Minimum Conventional FICO per Fannie Mae is:
- 2.
LLPAs are:
- 3.
Conventional waiting period after Chapter 7 discharge is:
- 4.
A buyer moves from a 679 to a 700 FICO. The likely impact is:
- 5.
Conventional waiting period after foreclosure (no extenuating circumstances) is:
0 of 5 answered