Written by: Internal Analysis & Opinion Writers
Fannie Mae has announced a significant change to its underwriting criteria: the removal of the minimum FICO® credit‑score requirement from its Selling Guide for loans submitted to Desktop Underwriter beginning November 15.
Previously, Fannie Mae mandated a minimum credit‑score threshold for every loan delivered to the secondary market, with borrowers required to meet specific FICO® ranges as part of eligibility. Under the updated guidance, those fixed minimums will no longer apply—giving lenders greater flexibility to assess borrower risk using broader credit‑reporting data and lender judgment.
Industry observers view the move as a major step toward loosening traditional credit constraints and opening the door for borrowers whose scores fall below prior cut‑offs but whose other factors—such as income, reserves and payment history—may support approval. Lenders anticipate that technology‑driven underwriting, alternative credit data and enhanced documentation will play a larger role going forward.
That said, the change raises new considerations for originators and credit risk teams. Without rigid score minima, underwriting becomes more subjective—placing increased emphasis on holistic borrower evaluation, documentation quality, and risk layering. Lenders will need to clearly document justification for exceptions and maintain robust credit models capable of navigating expanded borrower pools.
Servicers and investors also stand to be impacted. Loan performance metrics will become more important as credit‑score uniformity declines. Investors may ask for enhanced reporting, stress testing and monitoring of vintages that benefit from the score‑flexibility change.
From a compliance and regulation viewpoint, this shift demonstrates Fannie Mae’s evolving approach to risk and access under its broader mission. Borrowers who formerly lacked access due to outdated scoring thresholds may now gain entry. However, the industry will watch closely for any uptick in credit trends or performance volatility that could accompany the expanded lending reach.
In short, the removal of the minimum FICO score requirement marks a new chapter in mainstream mortgage underwriting—one where traditional score thresholds give way to more nuanced credit evaluation. Originators and lenders should adapt their strategies now to operate effectively in this changing environment.
