The move may expand home ownership to more people
of ConsumerAffairs-
FHFA and Fannie Mae have eliminated rigid minimum credit score floors (like 620) for conventional mortgages
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Lenders now can use newer credit score models (including VantageScore 4.0 as well as Classic FICO) and take a more holistic view of borrower risk
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Credit scores still matter, but underwriting focuses more on overall financial profiles than on single score cutoffs
In a major modernization of mortgage underwriting standards, the Federal Housing Finance Agency (FHFA) has ushered in rule changes that remove traditional minimum credit-score requirements for conventional mortgages backed by Fannie Mae and Freddie Mac a shift industry officials say could expand homeownership opportunities while maintaining risk controls.
For decades, borrowers seeking a conforming conventional mortgage the most common type of home loan in the United States typically needed a minimum credit score of around 620 to qualify for purchase by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. That numeric floor acted as a bright-line eligibility rule in automated underwriting systems.
Under the new FHFA-directed guidelines effectively implemented for loans submitted after Nov. 16, 2025 these rigid score thresholds have been removed. Fannie Maes Desktop Underwriter (DU) no longer requires a set minimum credit score to generate an approve/eligible finding, instead weighing a borrowers full financial profile including credit history, income, assets, and payment patterns in a more nuanced risk assessment.
A different view of creditworthiness
The FHFAs revamp reflects broader changes in how credit risk is measured in mortgage markets. Previously, lenders had to submit a borrowers Classic FICO score to the GSEs; now the rule allows lenders to deliver loans scored with either Classic FICO or VantageScore 4.0, with future plans to adopt additional models such as FICO 10T.
The newer models incorporate alternative data like rent and utility payments which can better assess credit for borrowers with limited traditional credit histories.
For borrowers, removing the minimum score requirement doesnt guarantee approval at any score, but more applicants particularly those with thin or non-traditional credit files may now see their overall financial strength considered more thoroughly. Credit scores remain important, but they are one of multiple inputs analyzed in automated underwriting systems.
For lenders and originators: The change signals a shift away from single-metric cutoffs toward layered risk evaluation. Many lenders still set internal minimums or overlays, and private mortgage insurers may maintain their own score thresholds. Clear documentation and robust underwriting remain critical.
What it means for home buyers
Market analysts say the FHFA changes could modestly expand mortgage access, particularly for first-time buyers, younger borrowers, and those with alternative credit histories. However, they caution that broader credit evaluation places greater emphasis on the quality of documentation and risk management practices across the industry.
As the mortgage sector adapts, the changes reflect a key policy evolution one that balances expanded access with prudent risk assessment in the nations housing finance system.
Posted: 2026-02-04 12:09:39
