Major mortgage credit score requirements just changed in November 2025.
Fannie Mae eliminated its 620 minimum credit score requirement, and lenders can now use alternative credit scoring models that consider rent payments, utility bills, and other payment history.
But here's what most homebuyers don't realize: not every lender has adopted these changes yet, and the way they evaluate your creditworthiness now varies dramatically from one lender to another.
I'm writing this guide because these credit score changes affect millions of potential homebuyers who previously couldn't qualify. According to estimates, 5 million new prospective buyers could now qualify for homeownership, with potentially $1 trillion in new mortgage activity. If you've been told your credit isn't good enough, these changes create real opportunities.
Here's what you need to know about the new mortgage credit requirements:
- Fannie Mae removed the 620 minimum credit score on November 15, 2025
- Lenders can now use VantageScore 4.0 alongside traditional FICO scores
- VantageScore 4.0 incorporates alternative data like rent and utility payments
- Not all lenders have adopted the new models yet
- You'll need to actively search for lenders using these new scoring methods
Let's break down exactly what changed, who benefits, and how to take advantage of these new opportunities.
What Actually Changed With Mortgage Credit Scores
The mortgage industry just went through its biggest credit scoring overhaul in decades. For years, lenders used only Classic FICO scores to evaluate borrowers. That system excluded millions of Americans with thin credit files or non-traditional credit histories.
The Federal Housing Finance Agency (FHFA) oversees Freddie Mac and Fannie Mae, which finance more than half of U.S. home loans. These agencies mandated changes to make credit scoring more inclusive and accurate.
Here are the three major changes:
1. Fannie Mae Eliminated Minimum Credit Score Requirements
Starting November 16, 2025, Fannie Mae's Desktop Underwriter (DU) system no longer requires a 620 minimum credit score. Instead, the system evaluates a broader set of credit risk factors including credit history, income, debt-to-income ratio, and payment patterns.
What this means:
- Someone with a 580 credit score but strong income and low debt might now qualify
- The focus shifts from a single number to your complete financial picture
- The FHFA director noted this ensures risk analysis is "agnostic of third-party credit scores"
Important: Lenders must still request credit scores for all borrowers, and certain loan types or private mortgage insurers may impose their own minimums. The 620 floor didn't disappear, it just became optional rather than mandatory.
2. Lenders Can Now Use VantageScore 4.0
Mortgage lenders now have the option to use VantageScore 4.0 alongside traditional FICO scores for loans sold to Fannie Mae and Freddie Mac.
VantageScore 4.0 works differently than Classic FICO:
Classic FICO focuses on:
- Credit card payment history
- Loan payment history
- Credit utilization
- Length of credit history
- Credit mix
VantageScore 4.0 also includes:
- Rent payments
- Utility bills (electric, gas, water)
- Telecommunications payments (phone, internet)
- Shorter credit history requirements
- Trended data showing payment patterns over time
Real-world example:
Meet Sarah. She's 28, rents an apartment, and pays all bills on time. She has:
- One credit card opened 2 years ago
- Student loan in good standing
- No auto loan or mortgage history
- Classic FICO score: 640
- VantageScore 4.0: 690
Under old requirements, Sarah barely qualified and got quoted 7.2% interest rate. Under VantageScore 4.0, her perfect rent and utility payment history boost her score 50 points, potentially qualifying her for a 6.7% rate.
On a $300,000 mortgage over 30 years:
- At 7.2%: Monthly payment $2,046
- At 6.7%: Monthly payment $1,929
- Monthly savings: $117
- Lifetime savings: $42,120
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3. Bi-Merge Credit Reports Are Now Accepted
Lenders can now submit two credit reports instead of three when calculating credit scores. Previously, mortgage lenders had to pull reports from all three credit bureaus (Equifax, Experian, TransUnion) and use the middle score.
How it works now:
- Lenders can pull from two bureaus instead of three
- They use the lower of the two scores (not middle of three)
- This reduces costs for lenders
- FHFA says this promotes more robust market competition
The controversy: TransUnion claimed some borrowers will pay higher rates or be declined because their most favorable credit data might be excluded. Their research suggested half a million mortgages could experience higher interest rates under bi-merge.
Who Benefits From These Changes
These new credit requirements help specific groups of potential homebuyers who struggled under the old system.
First-Time Homebuyers With Limited Credit History
Young buyers often have short credit histories. Maybe you:
- Opened your first credit card 2-3 years ago
- Never had an auto loan
- Always paid rent on time but it never counted toward credit
- Have student loans in good standing
Before: Your thin credit file might show a 620-650 FICO score. Lenders saw you as risky.
Now: VantageScore 4.0 can incorporate your rent payments, utility bills, and phone payments. This fuller picture often boosts scores significantly.
Renters With Perfect Payment History
If you've rented for years and never missed a payment, that history was invisible to mortgage lenders. You could pay $2,000 rent on time for 5 years straight and get no credit benefit.
Before: Only credit cards and loans built your credit score. Rent didn't count.
Now: VantageScore 4.0 incorporates rent payments into credit evaluation. That 5-year perfect rent history now helps you qualify.
The catch: Credit bureaus don't automatically get rent payment reports, you have to track and submit this information.
People Who Avoid Debt
Some people live cash-heavy lives. They pay cash for cars, use debit cards instead of credit cards, and avoid loans. This responsible behavior actually hurt their credit scores under the old system.
Before: No debt meant no credit history. No credit history meant low scores or no scores at all.
Now: Alternative credit data from utilities, phone bills, and rent payments can establish creditworthiness without traditional debt.
Communities Historically Underserved by Traditional Credit
VantageScore claims its model impacts creditworthy people of color who faced barriers under old scoring models. Communities with lower rates of traditional credit use benefit when alternative payment histories count.
People Rebuilding Credit After Financial Setbacks
If you had credit problems years ago but have rebuilt your financial life, VantageScore 4.0's trended data approach helps. It weighs recent payment behavior more heavily than older negatives.
How These Changes Actually Work in Practice
Understanding the policy changes is one thing. Knowing how to use them is another.
Not All Lenders Use the New Models
This is critical: lenders can choose whether to use Classic FICO scores or the new creditworthiness models.
Lenders currently using VantageScore 4.0 include:
- Veterans Administration lenders
- Several Federal Home Loan Banks
- Guild Mortgage
- AmeriHome
- CrossCountry Mortgage
- Movement Mortgage
- Primis Mortgage Company
Many traditional lenders still use only Classic FICO because:
- They're comfortable with the old system
- Their underwriting software isn't updated yet
- They're waiting to see how the new models perform
- They perceive VantageScore as riskier
What this means for you: Getting approved under the new rules requires finding a lender who has actually adopted them.
The Underwriting Standards Didn't Change
FHFA director William Pulte emphasized that underwriting standards remain the same. The agency changed which credit scores lenders can use, not how strictly they evaluate risk.
You still need:
- Stable income and employment
- Acceptable debt-to-income ratio (typically under 43%)
- Down payment (3-20% depending on loan type)
- Sufficient assets to close
- Documentation of income, employment, and assets
What VantageScore 4.0 changes is who can be scored and how payment behavior is weighted, it expands access by recognizing more people as creditworthy, but doesn't lower the bar for qualification.
Your Score Might Be Different Across Models
Don't assume your VantageScore 4.0 matches your FICO score. They calculate differently and often produce significantly different results.
Common scenarios:
Scenario 1: VantageScore higher
- You pay rent and utilities perfectly
- You have limited traditional credit
- Your VantageScore could be 30-80 points higher
Scenario 2: FICO higher
- You have long credit history with credit cards
- You rarely use alternative credit data
- Your FICO might be 10-30 points higher
Scenario 3: Scores similar
- You have established traditional credit
- You also pay rent and utilities on time
- Scores typically within 10-20 points
How to Take Advantage of These Changes
Here's your step-by-step action plan to benefit from the new credit requirements.
Step 1: Check Which Score Model Benefits You Most
Before applying for mortgages, understand which scoring model shows you in the best light.
Get your Classic FICO score:
- MyFICO.com (paid service, $39.95 for single bureau)
- Many credit cards provide FICO scores free
- Experian offers free FICO 8 scores
Get your VantageScore:
- Credit Karma (free VantageScore 3.0)
- Chase Credit Journey (free VantageScore 3.0)
- Capital One CreditWise (free VantageScore 3.0)
Note: Many free services show VantageScore 3.0, not 4.0. The actual score lenders see might differ, but the free version gives you directional guidance.
Compare the scores:
- If VantageScore is 20+ points higher, prioritize lenders using that model
- If FICO is higher, traditional lenders might offer better terms
- If scores are similar, shop based on rates and terms rather than scoring model
Step 2: Build Your Alternative Credit File
If you want to use VantageScore effectively, track rent and utility payments to have information included in your financial files.
Services that report rent payments:
- Rent Reporters ($50-95 setup fee)
- Rental Kharma ($6.95/month)
- LevelCredit ($6.95/month)
- PayYourRent (free if landlord participates)
How it works:
- Sign up for a rent reporting service
- They verify your rental history with your landlord
- They report past payments (often 2 years back) to credit bureaus
- They automatically report future payments
- Your VantageScore increases as this data appears
For utilities and telecom:
- Experian Boost (free) lets you add utility and phone bills
- Connect your bank account to verify payments
- Positive payment history gets added to your Experian credit file
- Works with many VantageScore models
Timeline: Allow 30-60 days for alternative credit data to appear on your credit reports after enrollment.
Step 3: Find Lenders Using the New Models
When shopping for a mortgage, ask lenders directly: "Do you accept VantageScore 4.0 for loans sold to Fannie Mae and Freddie Mac?"
Your search strategy:
Start with VA lenders if you're a veteran: VA-approved lenders have already begun accepting VantageScore 4.0.
Contact multiple lenders: Don't assume adoption is widespread. You may need to call 5-10 lenders to find ones using the new models.
Ask specific questions:
- "Do you use VantageScore 4.0 for mortgage underwriting?"
- "Can you evaluate borrowers with credit scores below 620?"
- "Do you accept alternative credit data like rent payments?"
- "Which credit bureaus do you pull from?"
Check online lenders: Digital-first mortgage companies often adopt new technologies faster than traditional banks.
Work with mortgage brokers: Brokers work with multiple lenders and can identify which ones use VantageScore 4.0.
Step 4: Prepare Your Financial Documentation
Regardless of which credit score model lenders use, you need solid financial documentation.
Gather these documents:
- Last 2 years of tax returns
- Last 2 months of pay stubs
- Last 2-3 months of bank statements
- Employment verification letter
- Rent payment history (12-24 months of canceled checks or receipts)
- Utility bill payment history
- Debt statements (credit cards, student loans, auto loans)
For alternative credit:
- Rent receipts or canceled checks showing on-time payments
- Utility bills showing payment history
- Phone/internet bills showing consistent payments
- Letters from landlords confirming rental history
Step 5: Understand Your Realistic Budget
Home prices and mortgage rates remain elevated by historical standards, making affordability the primary barrier regardless of credit score.
Calculate what you can actually afford:
Monthly housing payment should not exceed 28% of gross income:
- Income: $6,000/month gross
- Maximum housing payment: $1,680
- This includes mortgage, taxes, insurance, HOA fees
Total debt should not exceed 43% of gross income:
- Income: $6,000/month gross
- Maximum total debt: $2,580
- This includes housing + car + credit cards + student loans
Example:
Income: $6,000/month gross ($72,000/year)
- Maximum housing: $1,680
- Current debts: $500 (car + student loan)
- Remaining for housing: $2,080 (but limited to $1,680 by 28% rule)
With $1,680 for housing:
- Property taxes: $250
- Homeowners insurance: $150
- HOA: $100
- Available for mortgage payment: $1,180
At 6.5% interest rate, $1,180/month supports roughly a $186,000 mortgage. With 10% down, you could buy a $206,000 home.
Step 6: Address Credit Issues Before Applying
Even with more lenient scoring, cleaning up your credit helps.
Quick credit improvements:
Pay down credit card balances: Getting utilization under 30% can boost scores 20-40 points in 30 days.
Fix credit report errors: 20% of credit reports contain errors. Dispute inaccuracies immediately.
Don't close old accounts: Keep old credit cards open to maintain average account age.
Avoid new credit applications: Each hard inquiry can drop your score 5-10 points temporarily.
Pay all bills on time: Even one late payment in the last 12 months hurts your application.
What These Changes Don't Fix
While the new credit requirements help many borrowers, they don't solve all homebuying barriers.
Affordability Is Still the Biggest Challenge
Saving enough for a down payment and affording monthly payments on available homes continues to be the biggest challenge.
The math:
- Median home price: $420,000 (national average, December 2024)
- 10% down payment: $42,000
- Monthly payment at 6.5%: $2,394 (principal + interest)
- Add taxes and insurance: $3,000+ total monthly payment
- Income needed at 28% housing ratio: $10,714/month ($128,568/year)
Better credit scores help you qualify, but they don't change whether you can afford the payment.
Interest Rates Remain Elevated
Mortgage rates hover around 6-7% as of December 2024. Even with improved credit access, you're borrowing at rates significantly higher than the 3-4% rates available in 2020-2021.
Rate impact example:
$300,000 mortgage, 30 years:
- At 3.5%: Monthly payment $1,347
- At 6.5%: Monthly payment $1,896
- Difference: $549/month ($197,640 over life of loan)
Lower credit requirements don't offset this rate environment.
Down Payment Requirements Haven't Changed
Most conventional loans still require:
- 3% minimum down (first-time buyers)
- 5% minimum down (repeat buyers)
- 20% down to avoid PMI (private mortgage insurance)
If you don't have down payment savings, improved credit access doesn't help much.
Private Mortgage Insurance Still Applies
Certain loan types or private mortgage insurers may continue to impose their own credit score minimums.
If you put down less than 20%, you'll pay PMI. The insurance company sets their own credit requirements, often still 620 or higher for conventional loans.
Some Lenders May Charge Higher Rates
Lenders adopting VantageScore 4.0 might charge slightly higher interest rates to offset perceived risk. A lender using Classic FICO might offer 6.5% while a VantageScore lender offers 6.75% for the same borrower profile.
You need to compare total costs, not just approval odds.
The Bottom Line on Mortgage Credit Changes
The mortgage industry just made the biggest change to credit requirements in 35 years. Fannie Mae eliminated minimum credit score requirements, and lenders can now use alternative credit data that recognizes responsible financial behavior beyond traditional credit cards and loans.
This helps millions of potential homebuyers, especially:
- First-time buyers with short credit histories
- Renters with perfect payment records
- People rebuilding credit after setbacks
- Communities underserved by traditional credit scoring
But, and this is important, the changes don't automatically make homeownership easier. You still need stable income, manageable debt, and enough savings for a down payment. And you need to actively find lenders who have adopted the new scoring models.
Your action plan:
- Check your credit scores under both FICO and VantageScore
- Build alternative credit history through rent and utility reporting services
- Shop specifically for lenders using VantageScore 4.0
- Prepare thorough financial documentation
- Calculate realistic affordability based on your income
- Compare multiple lender offers on rates and terms
The door to homeownership just opened wider for millions of Americans. But you still need to walk through it with preparation, patience, and realistic expectations about what you can afford.
Start by checking your credit scores today. Then begin building your alternative credit file. In 60-90 days, you'll be in a much stronger position to take advantage of these new mortgage opportunities.