Fannie Mae is making a major shift in mortgage policy that could expand homeownership opportunities for thousands of Americans. Beginning November 16, 2025, the agency will remove its longstanding minimum credit score requirement of 620 for new loan case files.
Instead of relying on a hard stop based on a single number, Fannie Mae’s automated underwriting system will evaluate a borrower’s entire financial profile, including income, assets, down payment size, debt-to-income ratio, employment history, and available cash reserves. The goal: give more borrowers a fair chance at approval based on overall financial strength rather than credit score alone.
What the Change Does Not Mean
Experts emphasize that this shift should not be confused with a rollback of lending standards.
- Lenders will still pull credit reports.
- Credit scores will continue to influence loan pricing and interest rates.
- Private mortgage insurance companies may still require a 620+ score for borrowers putting less than 20% down.
- Mortgage lenders can continue enforcing their own overlays, including minimum score thresholds.
Who Stands to Benefit?
The new policy is expected to help “near-miss borrowers” — individuals who fall slightly below traditional credit score cutoffs but possess strong compensating factors.
These include:
- Borrowers with large down payments or strong savings
- Households with non-traditional or limited credit histories
- Applicants with one borrower lacking credit but combined income strengthening the file
- Consumers with scores in the low 600s but proven financial stability
According to industry professionals, this shift provides a more balanced and realistic assessment of creditworthiness at a time when many Americans struggle to maintain higher credit scores despite strong overall financial health.
Industry Response
Mortgage experts, including Steve Farrington of Unity Home Loans, view the change positively but urge borrowers to maintain realistic expectations. “This isn’t 2008,” Farrington explains. “Documentation, income verification, and ability-to-repay rules remain firmly in place.”
The broader sentiment across the mortgage industry is that the change will modernize underwriting practices while responsibly widening the pathway to homeownership.
