Fannie and Freddie Waived a Fee for First-Time Buyers Like You. Lenders Kept About 60% of It.

If you’re buying your first home and your income is at or under your area’s median, Fannie Mae and Freddie Mac already cut your mortgage fees. The question is whether your lender told you.

A new study says most of them didn’t pass it all along. They kept about 60 cents of every dollar.

The discount you never saw

Back in October 2022, with rates spiking, the Federal Housing Finance Agency told Fannie and Freddie to waive their loan-level price adjustments for lower-income first-time buyers. Those adjustments are fees the two agencies charge on a loan based on your credit score and down payment. Your lender pays them and hands the bill to you, either as a higher rate or as points.

The waiver covers first-time buyers earning up to 100% of area median income, or up to 120% in high-cost areas. It’s still running. Fannie Mae’s April 15, 2026 notice to lenders calls it a waiver it “currently” offers, and 2026 income limits took effect June 13.

Here’s the catch. You never see these fees. They’re a deal between your lender and Fannie or Freddie. So when the fee disappeared, the only person who knew was the lender.

What the lender did with it

Economists Neil Bhutta of the Philadelphia Fed and Benjamin Keys and Adithya Raajkumar of Wharton ran the numbers on near-universe loan data. Their October 2026 NBER working paper finds lenders passed through about 39% of the waiver on average. They estimate intermediaries kept more than 60% of $1.5 billion in waivers in 2023 and 2024.

It gets worse at the pricey end. Loan officers with a history of writing expensive mortgages passed through less than 20%. Pass-through was especially low at the largest nonbank lenders.

The authors’ polite version: loan officers “retain incentives to steer borrowers into higher-rate mortgages.” The paper hasn’t been peer-reviewed yet.

What that costs you

The paper puts the average waiver at about $2,500 in present value. At 39% pass-through, you’d see roughly $975 of it. The lender keeps about $1,525.

In the paper’s example, a buyer with a 650 credit score and 10% down had fees worth 2.75% of the loan waived. That’s $6,875 on a $250,000 mortgage. Losing 60% of that is real money.

Translation: the bank’s bet is that you’ll take the first quote.

Do this before you lock

Check your income against the limit. Freddie Mac’s eligibility tool and Fannie Mae’s AMI lookup show the cap for your county. If you’re under it and buying your first home, you should qualify.

Get three Loan Estimates on the same day. Same loan amount, same down payment, same lock period. The CFPB says to compare the same kind of loan from different lenders. Put the rates side by side, then check the points on page 2. Use our mortgage calculator to turn the rate gap into a monthly number, and read our guide to mortgage points before you pay any.

Ask in writing. “Is this loan priced with the first-time homebuyer LLPA waiver?” A loan officer who dodges that question just answered it.

Then take the cheapest offer. The paper’s explanation for the missing money is borrowers who don’t shop. Our first-time buyer lender picks are a place to start the list.

The fine print

The waiver applies to conventional loans sold to Fannie or Freddie, not FHA or VA loans. Starting January 15, 2027, Fannie Mae will use the date your lender creates your file in its automated underwriting system to decide which income limits apply. Ask your loan officer which year’s limits your file is using. Your waiver’s size depends on your credit score and down payment.

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