12/02/2025
For Conventional loans!
Fannie Mae just announced a major update that could expand access to homeownership for many borrowers.
Effective November 16, 2025, the 620 minimum credit score requirement for Desktop Underwriter (DU) loans has been removed. Instead of relying on a single number, DU will now evaluate a borrower’s overall financial profile.
What this means in practice:
• More flexibility for borrowers with limited or “thin” credit
Applicants who previously fell below 620 may now qualify if they show strength in other areas.
• A more holistic underwriting approach
DU will weigh income, assets, payment history, debt-to-income ratio, and broader financial behavior—rather than a score alone.
• Compensating factors still matter
Stronger reserves, lower DTI, and higher down payments remain key in offsetting lower credit scores.
• Credit issues still carry weight
Recent late payments or collections can still impact approval.
• Manual underwriting remains unchanged
Manually underwritten loans may still require a 620 score.
Additional DU Updates
• Second homes & investment properties:
The 720 score requirement for borrowers with 7–10 financed properties has been removed.
• Non-traditional credit:
DU no longer requires a credit score or homebuyer education when qualifying with nontraditional credit documentation.
These updates signal a continued shift toward more inclusive, real-world evaluations of a borrower’s financial readiness. If you have questions about how these changes could affect home financing options, we are always happy to help. 🏡
