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NAMP CMLP study materials
NAMP CMLP study resources

NAMP CMLP: Loan Products, Programs, and Pricing

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Loan Products, Programs, and Pricing

Domain 3: Loan Products, Programs, and Pricing

This domain tests product selection and pricing mechanics: conforming conventional, FHA, VA, USDA, jumbo, fixed and adjustable rates, mortgage insurance, points, and rate locks. Questions give borrower facts and ask which program fits or how pricing changes the payment.

Program basics

  • Conforming conventional: meets Fannie Mae/Freddie Mac guidelines and county loan limits; PMI generally required above 80% LTV and cancelable under the Homeowners Protection Act.
  • FHA: 3.5% minimum down with 580+ score; upfront MIP of 1.75% of the base loan amount plus annual MIP; MIP typically lasts the life of the loan if down payment is below 10%.
  • VA: eligible veterans, active duty, and surviving spouses; no monthly MI, but a funding fee (unless exempt); VA has its own residual income and appraisal rules.
  • USDA: rural-eligible properties, income limits, 100% financing, guarantee fee.
  • Jumbo: above conforming limits; stricter reserves and credit; portfolio-held.
  • ARMs: fixed period then adjusts by index plus margin, subject to caps; the APR reflects the fully indexed rate.

Pricing mechanics

  • Discount points are prepaid interest: one point equals 1% of the loan amount and generally lowers the note rate.
  • Lender credits raise the rate in exchange for closing-cost help.
  • LLPAs adjust price for credit score, LTV, occupancy, and property type; rate locks protect pricing for a set period, with extension fees.
  • The APR includes the note rate plus certain finance charges, so it is not the same as the note rate.

Worked example

A borrower has a 640 score, 3.5% down, and a $250,000 sales price. Conventional pricing with mortgage insurance is tight at that score; FHA allows 3.5% down at 580+, and the base loan is $241,250 (96.5% of price). Upfront MIP is 1.75% × $241,250 = $4,222, usually financed, giving a total loan of $245,472. The processor should show both options, but FHA is the likely fit.

Traps

  • Comparing note rates without comparing APR and mortgage insurance.
  • Assuming VA has monthly mortgage insurance.
  • Forgetting that FHA MIP may be permanent below 10% down.
  • Quoting a locked rate after the lock expires.