What’s Changing
Fannie Mae — one of the two major agencies that back conventional mortgages — just made a major update to its Desktop Underwriter (DU) system, the automated tool lenders use to approve home loans.
Until now, most conventional loans required a minimum credit score of 620 to even be considered for automated approval. If your score was below that, the system automatically said “no.”
Now, Fannie Mae has removed that hard 620 barrier. Lenders can run loan applications with scores below 620 through DU and see if the full financial picture still earns an approval.
What This Means in Plain English
Think of it like this:
Before, if your credit score was under 620, your application didn’t even get read — it was automatically denied.
Now, Fannie Mae’s system will actually review your entire file and look beyond just the number.
That means the computer can also weigh things like:
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Your debt-to-income ratio (DTI)
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Employment and income stability
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Savings or assets you’ve built up
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Payment history and consistency
If those factors look strong enough, you might still be approved for a conventional loan, even if your score starts with a “5.”
Why Fannie Mae Made This Change
Fannie Mae’s goal is to make mortgage approvals more inclusive — especially for first-time and middle-income buyers who manage their money well but don’t have perfect credit.
Many people with scores below 620 are financially responsible but face challenges like:
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Short credit history (especially younger borrowers)
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Medical debt or student loans
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Credit utilization that skews their score
By removing the automatic cutoff, Fannie Mae is encouraging lenders to evaluate borrowers on real financial behavior, not just a single number.
What It Doesn’t Mean
This change doesn’t mean everyone with a sub-620 score will qualify. It simply means the system can now consider your full picture.
Lenders can still set their own minimum score requirements, and you’ll still need to meet standard guidelines for income, assets, and credit history.
What You Can Do Next
If your score is below 620:
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Don’t count yourself out. Your lender can now submit your file to DU for a real evaluation.
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Keep working on your credit habits. Make payments on time, pay down balances, and avoid new debt.
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Talk to a lender early. They can help you see if your overall profile could qualify under these new guidelines.
For many buyers, this policy change could open the door to conventional loan options that were previously off-limits.
Have questions or want to see if you could qualify with a score below 620?
Just fill out the contact form on this page or give me a call—I’m here to help.
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Source: Housing Wire