{"id":187754,"date":"2026-05-01T08:26:42","date_gmt":"2026-05-01T14:26:42","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=187754"},"modified":"2026-05-01T08:26:45","modified_gmt":"2026-05-01T14:26:45","slug":"fannie-mae-and-freddie-mac-will-allow-rent-and-utility-payments-to-influence-credit-scores-making-rent-to-own-deals-for-tenants-more-feasible-for-landlords","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/fannie-mae-and-freddie-mac-will-allow-rent-and-utility-payments-to-influence-credit-scores-making-rent-to-own-deals-for-tenants-more-feasible-for-landlords","title":{"rendered":"Fannie Mae and Freddie Mac Will Allow Rent and Utility Payments to Influence Credit Scores, Making Rent-to-Own Deals for Tenants More Feasible for Landlords"},"content":{"rendered":"

The<\/span> rent-to-own<\/span><\/a> strategy has proven to be a trusted way for investors to sell their properties to tenants at a profit. What\u2019s not usually so trusted in these scenarios is the assurance that your tenants will improve their <\/span>credit scores<\/span><\/a> enough to qualify for a mortgage and actually be able to buy your rental.<\/span><\/p>\n

Help for the cause has arrived from an unlikely source: government-sponsored entities (GSEs) mortgage backers<\/span> Fannie Mae and Freddie Mac<\/span><\/a>, who are allowing rent and utility payments included in credit reports to <\/span>be factored<\/span> into mortgage approvals. <\/span>This<\/span> is particularly advantageous for landlords, as they can now easily monitor these two essentials to ensure tenants stay on track in their quest to become homeowners.<\/span><\/p>\n

New Rules: When Rent and Utilities Start to Count<\/span><\/h2>\n

The enhanced scoring models, which begin on July 10, aim to incorporate what<\/span> federal regulators<\/span><\/a> describe in a Federal Housing Finance Agency (FHFA) press release as a \u201cnew era of credit score competition.\u201d The new move <\/span>is intended<\/span> to make mortgage approvals easier for potential buyers to offset years of rising home prices under the former credit score system.<\/span><\/p>\n

According to the FHFA, both Fannie and Freddie are moving forward with the VantageScore 4.0 and FICO 10T models, which are specifically designed to favor alternative data, such as rental history, once reported to major credit bureaus.<\/span><\/p>\n

FHFA says this transition <\/span>is intended<\/span> to expand access to homeownership for creditworthy borrowers who <\/span>were previously overlooked<\/span> by older systems that relied heavily on traditional credit cards and installment loans.<\/span><\/p>\n

How Mortgage Lenders Access the Data<\/span><\/h2>\n

The new system will allow mortgage lenders to submit a borrower\u2019s bank account data, including 12 consecutive months of rent payments. According to Michael DeVito, CEO of Freddie Mac, it could be a game-changer for potential borrowers with limited credit history.<\/span><\/p>\n

\u201cBy factoring in a borrower\u2019s responsible rent payment history into our automated underwriting system, we can help make homebuying possible for qualified renters, particularly in underserved communities,\u201d DeVito said in a statement reported by<\/span> HousingWire<\/span><\/a>.<\/span><\/p>\n

Accessing a borrower\u2019s banking <\/span>info<\/span> can be <\/span>accomplished<\/span> with the <\/span>borrower’s<\/span> permission through common money transfer<\/span>\/payment<\/span> apps such as Zelle, Venmo, or PayPal.<\/span><\/p>\n

Landlords Are a Part of the Equation<\/span><\/h2>\n

Freddie Mac announced in November 2021<\/span><\/a> that it wanted <\/span>multifamily<\/span><\/a> landlords to report positive rental payments to the three major credit reporting bureaus through <\/span>Esusu Financia<\/span><\/a>l, enabling renters to become homeowners.<\/span><\/p>\n

Freddie Mac CEO Michael DeVito said at the time:<\/span><\/p>\n

\u201cRent payments are often the single largest monthly line item in a family\u2019s budget, but paying your rent on time does not show up in a credit report like a mortgage payment. That puts the 44 million households who rent at a significant disadvantage when they seek financing for a home, a car, or even an education. While there remains more to do, this is a meaningful step in addressing this age-old problem.\u201d<\/span><\/em><\/p>\n

Sister GSE Fannie Mae first announced in August 2021 that one-time rental payments would <\/span>be factored<\/span> into its underwriting calculations. Bill Pulte, chairman of Fannie Mae and Freddie Mac, said on<\/span> social media<\/span><\/a> the change \u201cexpands credit access to millions of forgotten Americans\u2014people who live in rural areas, renters who pay their rent on time every month\u2014and [helps] bring down closing costs.\u201d<\/span><\/p>\n

The Role Landlords Play<\/span><\/h2>\n

Rent and utility payments <\/span>aren\u2019t automatically factored<\/span> into a tenant\u2019s mortgage eligibility. Landlords or property managers typically need to <\/span>work with a rent-reporting service<\/span><\/a> to transmit data to Equifax, Experian, or TransUnion. To that end, Freddie Mac\u2019s multifamily division has launched a program that encourages this, including up to two years of on-time rental payments.<\/span><\/p>\n

For landlords of single-family properties who hope to sell to their tenant-occupants, Freddie Mac has updated its<\/span> Loan Product Advisor (LPA)<\/span><\/a> so lenders can indicate when a borrower\u2019s rent payment history has <\/span>been documented<\/span>.<\/span><\/p>\n

This<\/span> typically occurs in one of three ways: either through asset reports identifying recurring rent transfers; by submitting leases, bank statements, or canceled checks; or through third-party verification reports with prior tenant approval.<\/span><\/p>\n

PennyMac<\/span><\/a>, a major<\/span> correspondent lender<\/span><\/a>, said that for certain types of mortgages, a positive history of rent payments can upgrade a loan\u2019s risk class from \u201cCaution\u201d to \u201cAccept,” improving the borrower\u2019s approval chances. An essential component for approval is 12 months of consecutive on-time payments with no delinquencies.<\/span><\/p>\n

Fast-Tracking First-Time Homebuyers<\/span><\/h2>\n

In qualifying tenants, landlords might want to mention Freddie Mac\u2019s <\/span>Desktop Underwriter (DU)<\/span><\/a> system <\/span>to their tenants<\/span>, which <\/span>identifies<\/span> at least 12 months of recurring bank statements totaling $300 or more and uses that information to approve first-time homebuyers.<\/span> The advantage is that it does not directly affect the consumer\u2019s credit report or score.<\/span><\/p>\n

Equally, Fannie Mae\u2019s <\/span>Multifamily Positive Rent Payment Reporting pilot program<\/span><\/a> in the multifamily sector allows landlords to share positive rent payments with credit bureaus.<\/span><\/p>\n

To be considered for a Fannie Mae mortgage under current guidelines introduced in 2022, renters must meet the following criteria:<\/span><\/p>\n