An LLPA in a mortgage is a Loan-Level Price Adjustment, a risk-based fee that Fannie Mae and Freddie Mac charge on conventional loans, calculated as a percentage of your loan amount. The fee depends on your credit score, down payment, property type, how you plan to use the home, and the loan’s purpose. On a $400,000 mortgage, a 1% LLPA adds $4,000 to your costs. Fees can range from zero to several percentage points of the loan, so the inputs matter.
What Determines the Fee
LLPAs are cumulative. Multiple adjustments stack on top of each other, each tied to a different risk characteristic of your loan. The two biggest drivers are your credit score and your loan-to-value ratio, which is the loan amount divided by the home’s appraised value. Several other factors add their own surcharges on top of that base number.
- Credit score. Lower scores mean higher fees, with steep jumps below 740.
- Loan-to-value ratio. A smaller down payment increases the fee. Ratios above 80% carry noticeably higher adjustments.
- Property type. Condominiums, multi-unit properties, and manufactured homes all carry additional surcharges compared to a standard single-family house.
- Occupancy. Investment properties and second homes are hit with large surcharges that don’t apply to a primary residence.
- Loan purpose. Cash-out refinances cost more than purchases or rate-and-term refinances.
- Loan features. Adjustable-rate mortgages and loans with subordinate financing can trigger additional adjustments.
One factor that used to matter but no longer does: debt-to-income ratio. Fannie Mae removed all DTI-based LLPAs from its matrix in May 2023.1Fannie Mae. Loan-Level Price Adjustment Matrix
How Much the Fee Actually Costs
Your credit score and LTV combine to produce the base LLPA, and the differences between tiers are large. Here’s the 2026 matrix for purchase loans with terms longer than 15 years, using the 75.01–80.00% LTV range as an example:
- 780 or higher: 0.375%
- 760–779: 0.625%
- 740–759: 0.875%
- 720–739: 1.250%
- 700–719: 1.375%
On a $350,000 loan, the gap between a 720 score and a 740 score at this LTV works out to about $1,312 in fees.1Fannie Mae. Loan-Level Price Adjustment Matrix The 740 threshold is one of the steepest breakpoints on the grid. Borrowers with scores below 620 face the highest adjustments across every LTV tier, and combined with other surcharges those totals can reach several percent of the loan amount.
Property and occupancy surcharges are separate line items added to the base. Condominiums carry an extra 0.750% LLPA for purchase loans with LTV ratios above 75%.1Fannie Mae. Loan-Level Price Adjustment Matrix On a $300,000 condo purchase at 85% LTV, that’s an extra $2,250 before any credit or LTV adjustment.
Investment properties and second homes get hit hardest. Both carry identical surcharges: 1.125% at LTV ratios below 60%, climbing to 3.375% between 75.01% and 80% LTV, and 4.125% above 80%.1Fannie Mae. Loan-Level Price Adjustment Matrix These surcharges alone can add $10,000 or more to the cost of financing a rental property.
Cash-out refinances use a separate, higher grid. Even a borrower with a 780 or better score pays a 0.375% LLPA on a cash-out at LTVs below 60%, where a purchase at the same credit level would cost nothing. At 75.01–80.00% LTV, the cash-out fee runs 1.375% versus 0.375% for a purchase.1Fannie Mae. Loan-Level Price Adjustment Matrix
To estimate your own fee, pull up the matrix, find your credit band and LTV column for the right loan type, and add each surcharge that applies to your situation. The current matrix took effect January 28, 2026, and is updated periodically, so check it directly before you lock a rate.1Fannie Mae. Loan-Level Price Adjustment Matrix
How the Fee Shows Up on Your Loan
You won’t see a line item labeled “LLPA” on your Closing Disclosure. The fee gets built into your pricing in one of two ways.
The first is paying it upfront at closing. The lender adds it to your closing costs, usually reflected in the points or origination charges on your loan estimate. A 1.5% LLPA on a $300,000 loan means $4,500 due at the table. Your interest rate stays lower.
The second is accepting a slightly higher interest rate. The lender absorbs the upfront cost and recoups it through the rate over the life of the loan. A rough rule of thumb: each 1% in LLPA translates to roughly 0.25% in added rate, though the exact conversion depends on market conditions and the lender’s own pricing. You bring less cash to closing but pay more over time if you hold the loan long enough.
The break-even depends on how long you stay in the home. Sell or refinance within a few years and the higher rate costs less in total interest than paying upfront. Stay a decade or more and paying upfront usually wins. Most lenders can run both scenarios during the rate-lock process.
Who Pays Nothing: The First-Time Buyer Waiver
Not everyone pays full LLPAs. Since May 2023, Fannie Mae and Freddie Mac have waived all LLPAs for first-time homebuyers whose qualifying income is at or below 100% of the area median income, or 120% of AMI in high-cost areas.1Fannie Mae. Loan-Level Price Adjustment Matrix On a $350,000 loan with a 1.5% total LLPA, the waiver saves $5,250.
One exception: if your loan uses the minimum mortgage insurance coverage option, meaning you put down less than 20% and opted for a reduced level of private mortgage insurance, a separate LLPA for that feature still applies even when the rest are waived.1Fannie Mae. Loan-Level Price Adjustment Matrix
Affordable lending programs offer additional relief. Fannie Mae’s HomeReady and Freddie Mac’s Home Possible, both designed for borrowers earning up to 80% of area median income, cap how much LLPA you can be charged.2Freddie Mac Single-Family. Home Possible
How to Lower Your LLPA
Because the fee is formula-driven, you can sometimes change the inputs before you lock.
- Push your credit score past the next threshold. The 740 breakpoint is the most valuable target for most borrowers. Paying down a credit card balance or correcting a reporting error can sometimes move a score a few points.
- Increase your down payment past an LTV breakpoint. The matrix jumps at 60%, 70%, 75%, 80%, 85%, 90%, and 95%. Getting from 82% to 80% drops you into a lower band across the board.
- Choose a shorter loan term. Loans of 15 years or less have lower LLPA caps than longer-term loans.
- Check the first-time buyer waiver. If your income is at or below the AMI threshold and you haven’t owned a home in the past three years, the standard LLPAs are waived. This is the single biggest discount available.
- Compare a government-backed loan. FHA, VA, and USDA loans don’t use LLPAs. If the alternative fee structures work out cheaper for your situation, they may be the better path.
Loans That Don’t Use LLPAs
LLPAs exist only in the conventional loan space because they’re a Fannie Mae and Freddie Mac pricing tool. Government-backed programs use different fee structures.
FHA loans charge a mortgage insurance premium instead, both an upfront premium and an annual premium that lasts for the life of the loan in most cases. There’s no credit-score-based grid, which can make FHA attractive for borrowers whose scores would trigger high LLPAs on a conventional loan.
VA loans charge a funding fee. For a first-time VA purchase with less than 5% down, the fee is 2.15% of the loan amount. Put 5% or more down and it drops to 1.50%; put 10% or more down and it falls to 1.25%.3Veterans Affairs. VA Funding Fee and Loan Closing Costs Veterans with service-connected disabilities are exempt.
USDA loans for eligible rural areas charge a 1% upfront guarantee fee plus a 0.35% annual fee based on the remaining loan balance.4USDA Rural Development. USDA Single Family Housing Guaranteed Loan Program Overview For moderate-credit borrowers, both USDA fees combined are often lower than LLPAs plus private mortgage insurance on a conventional loan.