The 620 Rule Is Dead: How Fannie Mae's Big Change Could Help You Buy

Quick Takeaway

Fannie Mae just dropped its 620 minimum credit score requirement for most mortgages. This matters because Fannie Mae buys about 70% of home loans from lenders. If you've got solid income and savings but a credit score in the high 500s, you might now qualify for a conventional mortgage. But don't get too excited yet—your lender can still set their own rules, and you'll need to prove you can handle the loan in other ways.

Why This Change Affects Almost Every Lender

Here's something most first-time buyers don't realize: Fannie Mae doesn't actually give you a mortgage. Instead, they buy loans from banks and lenders after you close. This gives lenders the cash to make more loans.

Think of it like this: your local lender makes your loan, then sells it to Fannie Mae. That sale puts money back in the lender's pocket so they can help the next buyer. According to the National Association of Realtors, Fannie Mae and Freddie Mac together buy about 70% of all home loans in the country.

Because lenders know they'll sell most loans to Fannie Mae, they follow Fannie's rules. When Fannie changes its requirements, lenders across America pay attention.

How It Worked Before

Until November 2025, Fannie Mae required a minimum 620 FICO score for any loan they'd buy. This created a hard line in the sand:

• Score of 620 or higher? You could apply for a conventional loan.
- Score of 619 or lower? You were automatically disqualified—no matter how much money you had in the bank or how stable your job was.

That one-point difference kept plenty of responsible people from getting a conventional mortgage. Many had to turn to FHA loans (which have higher fees) or wait months to rebuild their credit.

What Changed

Starting November 16, 2025, Fannie Mae removed the 620 minimum score requirement from its Desktop Underwriter system. This is the automated software that most lenders use to approve loans.

Instead of using that hard cutoff, Fannie's system will now look at your whole financial picture—your credit history details, income stability, debt levels, and cash reserves. As FHFA Director Bill Pulte put it: "Big deal for consumers. Small or nothing deal for underwriting."

This follows a similar move by Freddie Mac earlier in 2025. Both agencies now focus on whether you can actually afford the loan rather than just your three-digit score.

Who This Really Helps

This change is aimed at "near-miss" borrowers—people with scores in the high 500s or low 600s who have steady jobs and money saved up. If you've been paying rent on time for years but don't have a long credit card history, this could work in your favor.

Fannie Mae's system can now consider things like your rent payment history, utility bills, and gig economy income as proof you're responsible with money.

Benefits and Risks: What You Need to Know

The Bottom Line

This change doesn't mean anyone with a 500 credit score can suddenly buy a house. You still need to prove you can afford the payment. But if you've been locked out of conventional loans by a credit score that's just a few points shy of 620—while having good income and savings—this update could be your way in.

One important caveat: individual lenders can still set their own minimums. Just because Fannie Mae doesn't require 620 doesn't mean your local bank will drop their requirement. Shop around and get quotes from multiple lenders—at least three—to find one that works with your situation.