The recent policy shift by Fannie Mae marks a major change in how conventional mortgages are underwritten: the minimum credit‑score floor tied to the classic FICO Score is being removed, making credit‑worthiness assessments broader and more inclusive. For mortgage professionals, real‑estate agents and homebuyers alike, this update opens new doors—but also requires sharper diligence. In this post we’ll walk through exactly what changed, why it matters, and how to leverage it.
Fannie Mae Eases FICO Score Barrier
On November 16, 2025, Fannie Mae will officially remove the 620 minimum credit score requirement from its automated underwriting system, Desktop Underwriter (DU). This means borrowers with FICO Scores under 620 will no longer be automatically disqualified from receiving conventional loan approval through DU. The change applies to new loan case files created on or after that date.
While the FICO Score still plays a role—lenders must continue to pull credit scores where traditional credit exists—it no longer serves as a hard cutoff. Instead, DU will consider a borrower’s full credit and financial profile, including income, debt levels, reserves, and other risk factors, rather than relying solely on the score itself.
This marks a significant shift from previous underwriting standards and opens the door to borrowers who may have strong financial habits but lower or limited credit scores. The update aligns Fannie Mae more closely with Freddie Mac, which made a similar move, and reflects a broader industry trend toward more inclusive credit evaluation practices.
What This Means for Loan Officers
This is a game-changer. Loan officers can now revisit previously declined files where the sole issue was a sub-620 FICO Score. It’s a chance to help more clients qualify by presenting their broader financial strengths. The key will be educating referral partners and borrowers that a low score no longer means a dead deal. Start prepping your marketing and internal processes now—November will be here fast.
What This Means for Real Estate Agents
Agents, this change means more of your buyers can get approved. Clients with limited credit history or one-time dings on their report now have a chance at homeownership under conventional terms. This also allows you to work with buyers you may have previously discouraged from starting the process. Promote this change in your buyer consultations—your clients will appreciate your up-to-date expertise.
What This Means for Buyers & Sellers
Buyers: If your FICO Score is under 620, don’t count yourself out. Starting November 16, 2025, you may qualify for a mortgage under new, more flexible guidelines.
Sellers: This change expands your pool of qualified buyers. More approvals mean more showings—and more opportunities for strong offers. Have questions?
Reach out to the mortgage or real estate pro who shared this post and start the conversation.
Source Stories: Scotsman Guide | Payments Journal
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