11/08/2025
Huge news from Fannie Mae regarding Mortgage approvals and credit score requirement changes.
Does this mean we're going back to the early 2000's and the industry is going to meltdown?
I don't think so, but only time will tell. In the meantime, here's what it means.
Old Rule: Minimum 620 FICO score to get approved. If you have a 619 score you cannot get a loan by yourself with Fannie Mae. It's doesn't matter if you have $10 million invested or you have 90% equity in your home -- It's 620 or bust.
New Rule: An algorithmic approach that accounts for more than just a score. It'll look at your payment history, your other debts, how long you've had open credit, income, assets, equity in the home, rental history etc. It's a more wholistic view of your finances.
This approach has been used in private lending for a long time, so it's not some crazy new idea.
If used correctly, we'll see some folks with higher credit scores get turned down from Fannie Mae when they would have previously been approved and we'll see others with lower credit scores get approved when they were previously denied.
As an optimist, I think this is a smart way to modernize mortgage lending and not the next meltdown on the horizon.
