{"id":185799,"date":"2025-11-24T13:07:50","date_gmt":"2025-11-24T20:07:50","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=185799"},"modified":"2025-11-24T13:07:52","modified_gmt":"2025-11-24T20:07:52","slug":"fannie-mae-and-freddie-mac-remove-minimum-fico-requirements","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/fannie-mae-and-freddie-mac-remove-minimum-fico-requirements","title":{"rendered":"Fannie Mae &#038; Freddie Mac Boldly Remove Minimum FICO Requirements\u2014Here&#8217;s Why That&#8217;s a Big Deal"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Remarkably, <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/singlefamily.fanniemae.com\/media\/44146\/display\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Fannie Mae has officially removed the 620 minimum FICO requirement for Desktop Underwriter (DU) submissions<\/span><\/a><span data-preserver-spaces=\"true\">, aligning their approach with Freddie Mac\u2019s LPA as of Nov. 15. Approvals are now determined entirely by DU\/LPA findings rather than a hard credit score cutoff. Strong compensating factors have the <\/span><span data-preserver-spaces=\"true\">largest impact toward obtaining A\/E findings\u2014e.g., larger down payments, shorter terms, excess assets, etc.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Within the first week, some top national lenders reported the following:&nbsp;<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Many approved applications <\/span><span data-preserver-spaces=\"true\">came in with<\/span> <strong><span data-preserver-spaces=\"true\">sub-620<\/span><\/strong><span data-preserver-spaces=\"true\"> FICOs\u2014roughly 6% of overall application volume\u2014<\/span><span data-preserver-spaces=\"true\">with<\/span><span data-preserver-spaces=\"true\"> some as low as <\/span><strong><span data-preserver-spaces=\"true\">490<\/span><\/strong><span data-preserver-spaces=\"true\">.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Several brokerages have already begun reevaluating their \u201cfallout\u201d files from the last 60 to 180 days, finding early wins among clients previously declined due to credit.<\/span><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The 620 minimum credit score requirement\u2014both for single borrowers and the average median score for multiple borrowers\u2014was eliminated for new loan casefiles created on or after Nov. 16, 2025.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Why Does This Matter to Investors?<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The Trump administration is making a concentrated effort to loosen credit and make borrowing more accessible and affordable.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Another example of expanding affordability <\/span><span data-preserver-spaces=\"true\">is <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/do-50-year-mortgages-make-sense-for-real-estate-investors\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">50-year mortgages<\/span><\/a><span data-preserver-spaces=\"true\"> and, <\/span><span data-preserver-spaces=\"true\">perhaps<\/span><span data-preserver-spaces=\"true\"> more <\/span><span data-preserver-spaces=\"true\">important<\/span><span data-preserver-spaces=\"true\">, mortgage portability.<\/span><span data-preserver-spaces=\"true\"> There are active discussions <\/span><span data-preserver-spaces=\"true\">on how to enable<\/span><span data-preserver-spaces=\"true\"> homeowners to take their mortgages with them, similar to how consumers can port their cell phone numbers from carrier to carrier. <\/span><span data-preserver-spaces=\"true\">The plan moves with them <\/span><span data-preserver-spaces=\"true\">instead of<\/span><span data-preserver-spaces=\"true\"> the mortgage staying with the property.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">This<\/span><span data-preserver-spaces=\"true\"> is a novel idea that could have <\/span><span data-preserver-spaces=\"true\">a major<\/span><span data-preserver-spaces=\"true\"> impact on inventory. It <\/span><span data-preserver-spaces=\"true\">is estimated<\/span><span data-preserver-spaces=\"true\"> that one-third of U.S. borrowers have a mortgage under 4%, creating a \u201clock-in\u201d effect, with downstream inventory constraints.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">By enabling borrowers to port their pandemic-era low-rate mortgages to either a downsized or upsized property, transactional activity would likely increase while relieving price pressures in some regions.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Conversely, there are many considerations for how <\/span><span data-preserver-spaces=\"true\">these programs would be implemented<\/span><span data-preserver-spaces=\"true\">, and whether they would actually level the market or skew favorability toward those with lower mortgage rates.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">In the upsizing scenario, guidelines <\/span><span data-preserver-spaces=\"true\">would need to <\/span><span data-preserver-spaces=\"true\">be set<\/span><span data-preserver-spaces=\"true\"> for the<\/span> <span data-preserver-spaces=\"true\">property type. <\/span><span data-preserver-spaces=\"true\">Could a primary mortgage be ported to an investment property, <\/span><span data-preserver-spaces=\"true\">maybe<\/span><span data-preserver-spaces=\"true\"> after a <\/span><span data-preserver-spaces=\"true\">certain<\/span><span data-preserver-spaces=\"true\"> period?<\/span><span data-preserver-spaces=\"true\"> And if the current loan balance was insufficient to cover the down payment difference on the purchase, will a second-lien program be introduced at more favorable rates? Otherwise, if the spread is large enough, the blended rate could actually be higher than a fresh conventional loan, albeit with the potential for extended amortization.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">From a lender and servicing perspective, mortgage notes would be much more likely to be held to maturity, which could influence rates or loan costs, <\/span><span data-preserver-spaces=\"true\">and <\/span><span data-preserver-spaces=\"true\">new guidelines would be instituted<\/span><span data-preserver-spaces=\"true\"> for a new class of borrowers.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">What to Do Now<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Real estate investors should pay particular attention to developments in mortgage markets heading into and through 2026, as any significant revisions to \u201cbusiness as usual\u201d could provide tight windows of opportunity to execute. Think of when rates bottomed during the pandemic, or the recently reimplemented 100% <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/bonus-depreciation\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">bonus depreciation<\/span><\/a><span data-preserver-spaces=\"true\"> for qualified and participating <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/short-term-rental-investing\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">short-term rental<\/span><\/a><span data-preserver-spaces=\"true\"> acquisitions.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Anyone on the qualifying FICO fence, or who <\/span><span data-preserver-spaces=\"true\">was recently declined<\/span><span data-preserver-spaces=\"true\"> for conventional loan programs <\/span><span data-preserver-spaces=\"true\">as a result of<\/span><span data-preserver-spaces=\"true\"> credit score, including FHA programs, should check in with their lender for an updated prequalification or approval letter. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Remarkably, Fannie Mae has officially removed the 620 minimum FICO requirement for Desktop Underwriter (DU) submissions, aligning their approach with Freddie Mac\u2019s LPA as of Nov. 15. Approvals are now [&hellip;]<\/p>\n","protected":false},"author":613785,"featured_media":179601,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7384],"tags":[],"class_list":["post-185799","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-politics-policy"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/185799","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613785"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=185799"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/185799\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/179601"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=185799"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=185799"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=185799"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}