Fannie Mae Removes Minimum Credit Score - What It Means for Homebuyers
CJ Postawa
If it's time to sell your home or find the home of your dreams, I can make it happen...
If it's time to sell your home or find the home of your dreams, I can make it happen...
Big news in the mortgage world: Starting November 16, 2025, Fannie Mae will remove its long-standing 620 minimum credit-score requirement for loans run through Desktop Underwriter® (DU®). This is one of the most meaningful eligibility updates we’ve seen in years, and it could expand the pool of buyers who qualify for conventional financing.
Below is a clear breakdown of what changed, what didn’t, and how it may help buyers who were previously sidelined by a single number.
What Changed?
Until now, borrowers needed a minimum representative credit score of 620 to be considered for a conventional loan underwritten by Fannie Mae. That rule goes away for new DU case files created on or after 11/16/25.
Instead of a strict cutoff, DU will rely entirely on its overall risk-assessment model, looking at factors like debt-to-income ratio, payment history, credit depth, reserves, income stability, and property eligibility.
Important: Removing the minimum doesn’t mean “any score qualifies.” It simply means DU will no longer issue an automatic denial solely because one borrower is under 620.
Why This Matters for Buyers
1. More borrowers may now qualify for conventional loans
Buyers who were previously stuck between FHA and conventional financing options—particularly those in the high-500s or low-600s—may now have a viable conventional path.
2. “Thin file” borrowers get a fair shot
Younger buyers, new immigrants, and those with limited credit history may benefit most. DU can now evaluate alternative signs of financial stability without the 620 hard stop.
3. Better competition = better options
Being eligible for both FHA and conventional opens the door to potentially:
lower monthly payments
fewer long-term mortgage insurance costs
stronger offers in competitive markets
4. Opportunity for buyers who paused their search
Anyone told “come back when your score hits 620” may now want to revisit their options.
What Stays the Same?
Lenders may still impose overlays. Some local lenders might keep their own minimum credit requirements, at least short-term.
Credit reports are still required. Fannie still mandates a valid credit file.
Strong financial fundamentals still matter. DU still evaluates payment history, income stability, reserves, DTI, and property type.
PMI companies may maintain their own thresholds. Not all private mortgage insurers will instantly mirror Fannie’s update.
Translation: This isn’t a “free-for-all.” It’s a more flexible gateway - not a risk-free pass.
How This Impacts Our Local Market
In markets like ours, affordability is already a challenge. Removing the strict 620 threshold means:
more first-time buyers can enter the market
more households may qualify for homes in affordable communities like Point Gardens
buyers who previously delayed homeownership can re-engage
sellers may see a slightly broader pool of eligible conventional buyers
How Buyers Should Prepare
Even with the rule change, buyers should put themselves in the strongest position possible. That means:
paying bills on time (the #1 factor)
lower credit card balances
avoiding new debt
document rent and utility payments
building some savings/reserves
The stronger the overall profile, the better DU’s findings will be.
Bottom Line
Fannie Mae’s removal of the 620 credit-score minimum is a big win for buyers with limited credit history or scores just below the old cutoff. While lenders will still apply full underwriting standards, this change gives more borrowers a chance to qualify for stable, conventional financing.
Have questions or want to see how this affects your buying power? Reach out today, our team is happy to walk you through it! 🙌🏻
