Fannie Mae & Freddie Mac Boldly Remove Minimum FICO Requirements—Here’s Why That’s a Big Deal
Summary
Fannie Mae and Freddie Mac have removed minimum FICO score requirements for loan approvals, potentially opening up access to financing for investors. This change could create opportunities for those previously denied or on the credit score fence and influence the real estate market. Hosts should check in with their lenders regarding prequalification.
Key Insights
- •Within the first week, some top national lenders reported that roughly 6% of overall application volume had sub-620 FICOs, with some as low as 490.
- •Fannie Mae has officially removed the 620 minimum FICO requirement for Desktop Underwriter (DU) submissions, aligning their approach with Freddie Mac’s LPA as of Nov. 15. Approvals are now determined entirely by DU/LPA findings rather than a hard credit score cutoff.
Action Items
- ✓Real estate investors should pay particular attention to developments in mortgage markets heading into and through 2026.Effort: lowImpact: medium
- ✓Anyone on the qualifying FICO fence, or who was recently declined for conventional loan programs as a result of credit score, including FHA programs, should check in with their lender for an updated prequalification or approval letter.Effort: lowImpact: medium
Common Mistakes
- ⚠Avoid missing out on potential opportunities presented by changes in mortgage market dynamics in 2026.
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