What This Really Means for Homebuyers
Quiet changes often carry the most impact. This may be one of them.
In late 2025, Fannie Mae removed the minimum credit score requirement tied to conventional loans. For decades, the 620 credit scores acted as a hard stop. Buyers below it rarely explored Conventional Financing because they assumed approval was impossible.
That assumption no longer applies.
This change does not remove standards. It removes automatic rejection tied to a single number. Borrowers now receive a full review based on their complete financial profile.
What Changed and What Did Not
Fannie Mae no longer publishes a hard minimum credit score for conventional loans.
One number no longer blocks the application.
Credit scores still matter. Lenders still price for risk. Higher scores still lead to better rates and lower costs.
The difference lies in flexibility. Files move forward to underwriting instead of stopping at the door. Borrowers receive an evaluation instead of an instant decline.
Who Benefits From This Update
This shift helps buyers who previously felt stuck.
It benefits:
- Buyers with credit scores below 620
- Buyers rebuilding credit
- Buyers comparing FHA loans with conventional financing
Conventional loans carry long-term advantages for the right borrower. Private mortgage insurance drops off once equity builds. That reduces monthly costs over time.
Access does not equal affordability. Lower scores still affect rates and terms. The value lies in having options again.
How Conventional Loans Are Approved Today
Every conventional loan still requires automated underwriting approval.
Fannie Mae loans run through Desktop Underwriter. Freddie Mac loans run through Loan Product Advisor. These systems analyze risk across the entire application.
They do not rely on a credit score alone.
They evaluate:
- Income stability
- Debt-to-income ratio
- Assets and reserves
- Payment history patterns
- Loan structure
A borrower with a lower score and strong fundamentals often presents less risk than a borrower with a higher score and weak stability. Automated underwriting reflects that reality.
This is the real change. Full financial profiles now drive outcomes.
Why Outcomes Differ Between Buyers
Two buyers with the same credit score often receive different results.
The difference comes from structure. Income documentation. Debt management. Asset sourcing.
Automated Underwriting responds to detail. How the file is built affects the decision.
This is where lender experience matters. Strong structuring improves approval strength.
What Lenders Still Evaluate Closely
Credit score remains important. It no longer acts alone.
Lenders continue to focus on:
- Consistent income
- Reasonable debt levels
- On-time payment history
- Available savings
Approval reflects balance. Strength in one area offsets weakness in another. This update allows balance to matter.
Should You Apply With a Score Below 620
This change does not guarantee approval. It creates an opening for real evaluation.
Important trade-offs remain.
- Lower scores often lead to higher interest rates
- Down payment requirements vary
- FHA and conventional loans solve different problems
For some buyers, FHA financing still fits best. For others, conventional loans now deserve a second look. Removable PMI often changes the long-term math.
The smartest move is comparison using real numbers.
The Bigger Takeaway
Buyers lose opportunities when they rule themselves out early.
This update restores control. You replace guessing with facts. You see real paths forward instead of assumed barriers.
At Certified Home Loans, we help Raleigh-area homebuyers and homeowners understand how their full financial profile performs in automated underwriting. We run both conventional approval systems. We compare outcomes side by side. We explain the numbers in plain language so you know where you stand.
Local experience matters. Income structures, self-employment, bonuses, and multiple properties affect underwriting results. Our team structures files with these realities in mind and aligns each borrower with the program that fits best.
A single number no longer locks the door. The advantage belongs to buyers who work with a lender who knows how to find real answers and turn them into clear next steps.
