Fannie Mae Removes 620 Credit Score Minimum: What This Means for Homebuyers

In a major move to modernize the mortgage industry, Fannie Mae officially removed its long-standing 620 minimum credit score requirement for loans processed through its Desktop Underwriter (DU) system on November 16, 2025.

For decades, the 620 score acted as a "digital wall." If you were even one point below it, the system would often trigger an automatic "No," regardless of how much you had in savings or how steady your job was. By dismantling this barrier, Fannie Mae is shifting the focus from a single number to your entire financial story.

Here is why this change is a game-changer for today's homebuyers.

1. From "Gatekeeper" to "Holistic Review"

Previously, the 620 FICO score was the gatekeeper. If you didn't meet it, your application rarely saw the light of day for a conventional loan. Now, Fannie Mae uses a proprietary risk assessment that looks at the "big picture."

Instead of a hard cutoff, the system now weighs multiple factors:

Income Stability: How long you've been at your job and the consistency of your earnings.
Cash Reserves: The amount of "rainy day" money you have in the bank after the down payment.
Debt-to-Income (DTI) Ratio: How much of your monthly income goes toward debt.
Payment History: Your track record of paying bills, even those that don't always show up on a traditional credit report.

2. A Lifeline for "Credit Invisible" Buyers

Millions of Americans are "credit invisible"—meaning they pay their bills on time but don't use traditional credit cards or personal loans. Under the old rules, these buyers were often forced into FHA loans (which can have higher long-term insurance costs) or denied altogether.

The new policy allows lenders to use nontraditional credit data, such as:

Consistent rent payments
Utility bills (electric, water, gas)
Cell phone and internet service payments

This is particularly helpful for younger buyers or immigrants who have a strong history of financial responsibility but haven't spent years building a "FICO profile."

3. Helping "Near-Miss" Borrowers

Life happens. A medical emergency, a divorce, or a brief period of unemployment can cause a credit score to dip temporarily. Under the 620-minimum rule, a borrower with a 615 score but $50,000 in savings would still be rejected.

Now, that same borrower has a path to approval. If your "compensating factors"—like a large down payment or low debt—are strong enough, the system can overlook the lower score.

Comparison: Old vs. New

Feature	Prior Rule (Pre-Nov 2025)	New Rule (Current)
Minimum Score	620 (Hard Cutoff)	No Minimum (Risk-Based)
Primary Factor	The FICO Score	Holistic Financial Profile
Thin Credit	Often lead to automatic denial	Evaluated via rent/utilities
Investment Props	720 score required for 7+ properties	Requirement Removed

Important Caveats to Keep in Mind

While Fannie Mae has removed the "floor," this isn't a "free-for-all." It is important to remember:

Lender Overlays: Individual banks can still set their own minimum scores (e.g., a bank may still decide they won't lend below 600).
Risk-Based Pricing: Your interest rate is still tied to risk. While you might get approved with a 590 score, your interest rate will likely be higher than someone with a 740.
PMI Requirements: If you put down less than 20%, private mortgage insurance (PMI) companies may still have their own credit score requirements to insure the loan.

The Bottom Line

Fannie Mae's shift represents a move toward a fairer, more data-driven housing market. It acknowledges that a three-digit number doesn't always define your ability to be a successful homeowner.