Fannie Mae Drops Minimum FICO Score Requirement
Fannie Mae no longer requires borrowers to have a 620 minimum credit score if the loan is processed through its Desktop Underwriter system. As of Nov. 16, 2025, it joined Freddie Mac, which made a similar policy update earlier this year.
Does this mean people with subprime credit scores can now qualify for conventional mortgages? Not quite, but here’s what you need to know.
Fannie Mae’s Elimination of the Minimum FICO
Dropping the minimum credit score requirement applies to mortgage loan underwriting that is done through Fannie Mae’s Desktop Underwriter. The DU is an automated mortgage loan underwriting system that is used by lenders for the majority of their loans.
“The announcement means that Fannie Mae will not have a minimum credit score requirement as long as the file receives an ‘approve/eligible’ response from DU,” says Jason Iacovelli, senior loan officer for North Carolina-based reAlpha Mortgage.
Bill Pulte, the director of the Federal Housing Finance Agency, had this to say on X about the change: “Big deal for consumers. Small or nothing deal for underwriting.”
But is it actually a big deal for consumers? While it could open up the market to lower-credit borrowers, borrowers will still need to meet other underwriting criteria such as down payment, cash reserves, debt-to-income ratio, stable income and employment. And there’s a good chance that if all of those boxes are checked, those borrowers probably have a healthy credit score, too.
“If the credit score is below 620, there’s often issues on the credit (late payments, collections, etc.) that would prevent the DU approval,” says Iacovelli.
Even though Fannie Mae dropped its FICO minimum, individual lenders still have the ability to set their own credit score requirements. “That being said, there may be cases where someone with a 597 score is approvable by DU and could possibly get into a home sooner than they would prior to Fannie’s policy change,” Iacovelli says.
Shawn King, co-founder and executive vice president of sales of Arrive Home, a down payment assistance program, is a bit more optimistic that the new rule could broaden the pathway for more borrowers to qualify for a conventional loan. “Fannie Mae wants to create an environment where more responsible borrowers can qualify using alternative standards, such as income from shared-economy jobs, rental payment history, etc.,” King says.
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Could This Have a Negative Impact on the Housing Market?
Some experts, including the National Association of Mortgage Underwriters, warn that dropping the minimum credit score puts more onus on the lender to assess borrower risk. Other skeptics worry that loosening the rules too much is what got the industry in trouble in 2008.
Iacovelli says it’s really more of a back-end technology change and not cause for worry — at least for now. “I wouldn’t envision it hurting the housing market by letting in undeserving buyers,” he says, “but it does open the door for Fannie Mae to be looser with its underwriting engine in DU and give them a valve to turn on and off at will to fluctuate with market needs.”
In the meantime, for the handful of borrowers it impacts, the rule could help them achieve their dream of homeownership sooner. King says, “This move signals a real willingness to expand opportunity to more first-time and less-traditional borrowers.”
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Fannie Mae Drops Minimum FICO Score Requirement originally appeared on usnews.com