11/11/2025
Mortgage news!
There are some big updates in the mortgage world right now, and they could open doors for a lot of future homeowners.
First, Fannie Mae is dropping the 620 minimum credit score requirement.
Starting in late 2025, Desktop Underwriter (DU) will no longer have a hard credit-score cutoff. Instead, it will evaluate the whole picture...income, payment history, verified rent, reserves, and overall stability.
This means a lower score alone won’t automatically disqualify someone.
Why does this matter?
Let's take a look at Conventional vs. Government Loans
With Fannie Mae’s changes, more borrowers who might have looked at FHA or VA loans could now benefit from conventional financing. Here’s why that can make sense:
• Conventional appraisals are typically less restrictive when it comes to property condition.
• There’s no upfront funding fee (unlike FHA or VA).
• Private mortgage insurance (PMI) can be removed once you reach 20% equity.
• Conventional loans can be used for second homes or investment properties, offering more flexibility.
FHA, VA, and USDA loans are still excellent programs and absolutely have their place. But conventional lending is becoming more accessible again, and that’s a good thing for many buyers.
Second, a 50‐year fixed mortgage is back in the headlines. Donald Trump recently floated support for making 50-year mortgages available (and the Federal Housing Finance Agency/FHFA has referenced working in that direction). A 50-year term might sound wild, but it’s being introduced as a way to make payments more affordable.
Here’s the trade-off:
• Lower monthly payment
• Much slower equity build
Many argue “no one keeps a mortgage that long anyway.” Fair point, but even if you sell or refinance in 5 years, you’ll have built very little equity from principal paydown. Most of your payment goes to interest early on.
So while it can help with cash flow, it’s not a fast track to wealth building, appreciation and a strong down payment still do the heavy lifting.
Yes, I really do like talking about numbers, mortgages and mortgage myths. Weird hobby, I know.
