Fannie Mae Scraps 620 Minimum Credit Score for Homebuyers

By The Klaus Team

The Kenny Klaus Team is one of the most successful real estate teams in America. Since 2010, The Kenny Klaus Team has been consistently ranked in the Top 120 teams nationwide by Real Trends and the Wall Street Journal.

What happens when your score sits below 620, but your income, savings, and overall financial strength are solid? Many borrowers hit a wall before the conversation even begins. Fannie Mae’s updated rule helps change that.

The minimum credit score requirement of 620 was removed for new loan case files created on or after November 16, 2025.

To understand what this shift actually means, here’s a quick breakdown of the core changes, what hasn’t changed, and who stands to gain the most from the new approach.

Approval now based on the full financial picture. With the 620 cutoff gone, Fannie Mae’s Desktop Underwriter (DU) system now evaluates the full financial profile of a borrower. It looks at income, assets, down payment, debt-to-income ratio, employment history, and cash reserves, rather than stopping the process based on a single score.

What still applies under the new guidelines? This is not a return to the loose lending practices that led to the 2008 subprime crisis. Standards remain solid.

Lenders still pull credit, and credit scores still affect interest rates and pricing. Private mortgage insurance companies may still require a 620 score when the down payment is under 20%. Lenders can also set their own minimum score rules, known as overlays, which remain in effect.

Other critical safeguards also stay in place, including documentation requirements, income verification, ability-to-repay rules, and qualified mortgage guidelines.

Who benefits most? This update primarily helps what we call “near-miss” borrowers, people with strong finances but thin or non-traditional credit files. These may include borrowers with:

• A large down payment
• High and stable income
• Solid cash reserves

Someone with a 615 score but strong financial depth may now qualify. Households where one borrower has limited or no credit may also benefit when their combined income strengthens the application.

The change widens access without weakening standards. It helps current homeowners tap their equity and opens more paths for first-time buyers with solid financial fundamentals. This is smarter underwriting, not looser lending.

If you want to know how this affects your specific situation, reach out anytime at (480) 354-7344 or email solutions@klausteam.net. We can run your scenario through Fannie Mae’s automated system (DU) and give you clarity based on real data, not headlines.