Fannie Mae Drops Minimum Credit Score for Mortgage Approval: What It Means for Home Buyers

In a move that could reshape the mortgage landscape, Fannie Mae has announced it's eliminating the longstanding 620 minimum credit score requirement. This significant policy change takes effect on November 16, 2025, just days away, and represents one of the most substantial shifts in mortgage underwriting we've seen in years.

For millions of potential homebuyers who've been locked out of financing due to credit scores below 620, this could be a game-changer. But what does this really mean for you, and how might it impact your path to homeownership?

Fun fact: Fannie Mae is a government-sponsored enterprise that buys mortgages from lenders on the secondary market. Their sole purpose is to buy mortgages to provide liquidity and affordability to the US housing market. They set the standards that lenders must consider when writing home loans.

What's Actually Changing

Let's break this down in simple terms. Previously, if you applied for a mortgage through Fannie Mae's "Desktop Underwriter" (aka DU) system with a credit score below 620, you'd get an automatic rejection before anyone even looked at the rest of your financial picture. That process of automatic denial due to your credit score is now gone. 

Instead of relying on that single number, Fannie Mae's system will now conduct a comprehensive analysis of your entire financial profile. This means your income stability, cash reserves, debt-to-income ratio, and even alternative credit data like rental payment history can and may all be factored into the decision.

The change also opens the door to alternative credit models beyond traditional FICO scoring. Think rental payments, utility bills, and other financial behaviors that demonstrate your ability to manage money responsibly, even if they haven't traditionally been captured in your credit score.

Who Benefits Most from This Change

First-Time Homebuyers

This policy shift could be particularly impactful for first-time buyers, who now represent less than 25% of all home purchases, the lowest share in nearly 45 years. The median age of first-time buyers has climbed to a record, partly because many younger buyers have been priced out or couldn't qualify due to limited credit histories.

If you're a younger buyer with a steady job and good savings habits but a thin credit file, this change could open doors that were previously closed.

"Near-Miss" Borrowers

Perhaps the biggest beneficiaries are what industry experts call "near-miss" borrowers, people with credit scores in the 580-619 range who are otherwise financially responsible. These borrowers often have:

• Consistent income and employment history

• Solid cash reserves

• Responsible spending habits

• Credit challenges due to circumstances beyond their control

Medical debt, student loans, or temporary financial setbacks might have pushed their scores below 620, but their overall financial picture tells a different story.

Borrowers with Non-Traditional Credit Profiles

If you've been building wealth and managing money responsibly but haven't used traditional credit products heavily, this change could be significant. Maybe you've been paying rent on time for years, managing utility bills responsibly, or using debit cards and cash for most purchases. These positive financial behaviors can now be part of your mortgage application story.

What Stays the Same

Before you get too excited, it's important to understand what this change doesn't affect. Fannie Mae's comprehensive underwriting standards remain firmly in place and your loan file still may be subject to manual underwriting (MU). The DU system will still evaluate:

• Your debt-to-income ratios: this is calculated as a percentage and determined by how much debt you have in relation to how much income you have.

• Available cash reserves: cash on hand that must be "sourced", lenders must be able to determine where your money came from in order to count it as income

• Income verification and stability: bank statements, pay stubs, verification of employment

• Property type/characteristics: single family, 2-4 unit property, or second home/investment property

• Overall risk factors

Think of it this way: removing the minimum credit score requirement doesn't mean anyone can get approved for a mortgage. It simply means the computer won't automatically say "no" based on one number before considering your full financial story.

Additionally, individual lenders can still maintain their own minimum credit score requirements if they choose. So while Fannie Mae won't automatically reject your application at 615, your specific lender might still have their own 620 minimum. It's worth shopping around to find lenders who are embracing this more flexible approach.

Real-World Impact: Colorado and New York Examples

The impact of this policy change will vary by market, but let's look at how it might play out in two very different housing markets.

Colorado Buyers

Colorado's housing market has been challenging for first-time buyers, with median home prices well above national averages. The state offers several down payment assistance programs which could work particularly well with this new credit flexibility.

A buyer in Denver with a 600 credit score, stable employment in the tech sector, and access to down payment assistance might now qualify for a conventional loan where they previously would have been limited to FHA financing or locked out entirely.

New York State Buyers

New York presents unique challenges with some of the highest home prices in the nation, particularly in the NYC metro area. However, the State of New York Mortgage Agency (SONYMA) offers various first-time buyer programs that could complement this new credit flexibility.

A teacher in Rochester or Buffalo with a 610 credit score and access to SONYMA programs might now have conventional financing options that weren't available before, potentially saving thousands in mortgage insurance costs over the life of the loan.

Industry Reactions and Expert Opinions

Industry professionals have had mixed reactions to this announcement. Proponents argue it's long overdue, pointing out that credit scores don't always reflect a borrower's true ability to repay a mortgage. A borrower who's never missed a rent payment but had medical debt or student loan issues might have an artificially low credit score.

Critics worry about increased risk in the mortgage market, though supporters point out that Fannie Mae's comprehensive risk analysis should help mitigate these concerns. The key is that this isn't a lowering of standards: it's a more comprehensive approach to evaluating creditworthiness.

What This Means for Your Home Buying Strategy

If you've been working to improve your credit score to reach that 620 threshold, don't abandon those efforts. Higher credit scores still mean better interest rates and more favorable loan terms. But if you're currently in the 580-620 range and otherwise financially stable, it might be worth talking to a lender sooner rather than later.

Here's what you should consider:

Document Everything: With more subjective underwriting, documentation becomes even more important. Gather records of on-time rent payments, utility bills, and any other evidence of financial responsibility.

Shop Around: Some lenders will maintain their own minimum credit score requirements. Look for lenders who are actively promoting their willingness to work with borrowers in this credit range.

Consider the Total Cost: While you might qualify for a conventional loan with a lower credit score, compare the total costs (including interest rates and fees) with other options like FHA loans.

Work on Your Full Financial Picture: Focus on strengthening all aspects of your financial profile: increasing your down payment, reducing debt-to-income ratios, and building cash reserves.

Looking Ahead

This change is part of a broader trend toward more inclusive lending practices. Freddie Mac (another government-sponsored enterprise that buyers mortgages) has made similar adjustments, and the Federal Housing Finance Agency has been pushing both government-sponsored enterprises to take a more flexible approach to credit evaluation.

The real test will be how lenders implement these changes and whether they translate into increased homeownership opportunities for previously underserved borrowers. Early adoption will likely vary by lender, region, and market conditions.

For potential homebuyers who've been working toward that 620 credit score threshold, this news offers hope and potentially faster access to homeownership. However, it's not a free pass to ignore your credit health: it's simply a more thorough way to evaluate your creditworthiness.

If you're considering buying a home and have questions about how this change might affect your specific situation, our team is here to help. We can connect you with lenders who are embracing this new flexibility and help you understand all your financing options.

The path to homeownership just got a little wider for some buyers. The question now is whether you're ready to take that first step.

The 50-Year Mortgage: What You Should Know

You've probably seen the headlines lately: "50-year mortgages could make homeownership more affordable!" But before you get excited about lower monthly payments, let's cut through the noise and look at what these loans actually mean for your financial future.

A 50-year mortgage is exactly what it sounds like, a home loan that stretches your payments over 50 years instead of the traditional 30. The idea isn't entirely new, but it's gaining attention as housing prices continue to climb and buyers struggle with affordability.

How 50-Year Mortgages Actually Work

The mechanics of it are straightforward: instead of making 360 payments over 30 years, you'd make 600 payments over 50 years. This extended timeline reduces your monthly payment, which sounds appealing on the surface.

Here's a real-world comparison using a $400,000 loan:

30-Year Mortgage at 7% interest:

• Monthly payment: $2,661

• Total interest paid: $558,000

• Total amount paid: $958,000

50-Year Mortgage at 7.5% interest:

• Monthly payment: $2,518

• Total interest paid: $1,110,800

• Total amount paid: $1,510,800

That's a monthly savings of about $143, but you'll pay an additional $552,800 in interest over the life of the loan.

The Real Cost of Lower Payments

Let's be direct about what you're actually trading off. Yes, your monthly payment drops by roughly 10-15%, but the total cost of homeownership skyrockets. In many cases, you'll pay nearly twice the home's original purchase price in interest alone.

The math gets worse when you factor in that lenders typically charge higher interest rates on 50-year mortgages. Since these loans are considered riskier, expect to pay anywhere from 0.4% to 0.6% more than current 30-year rates. Some industry estimates suggest rates could reach 7.3% or higher for 50-year terms.

Building Equity at a Snail's Pace

One of the biggest downsides that doesn't get enough attention is how slowly you build equity. In the early years of any mortgage, most of your payment goes toward interest rather than principal. With a 50-year loan, this problem is amplified significantly.

Consider this: after 10 years of payments on a traditional 30-year mortgage, you might own 15-20% of your home's value. With a 50-year mortgage, you'd likely own less than 10%. You're essentially renting from the bank for much longer, even though you're technically the owner.

Current Market Reality and Expert Opinions

Recent commentary from real estate professionals and financial experts has been mixed but largely cautionary. While some see 50-year mortgages as a tool to help buyers qualify for homes they otherwise couldn't afford, others argue they're a band-aid solution that doesn't address the root problem of housing supply shortages.

The industry criticism focuses on several key points:

• These loans don't actually make housing more affordable: they just shift costs to the future

• Qualification standards won't change dramatically, so many priced-out buyers still won't qualify

• The extended debt obligation could limit financial flexibility for decades

• Regulatory uncertainty exists around whether 50-year terms meet lending standards

Supporters argue that:

• Lower monthly payments help buyers qualify under debt-to-income requirements

• Young professionals with growing income potential could benefit from initial affordability

• Market access is better than no market access at all

When a 50-Year Mortgage Might Make Sense

Despite the drawbacks, there are limited scenarios where this option could work:

You're planning to stay in the home long-term and prioritize monthly cash flow over total cost. If you're confident about your 30+ year housing plans and need the breathing room in your budget, the extended term might align with your goals.

You have a clear refinancing strategy. Some buyers might use a 50-year mortgage as a temporary solution, planning to refinance to a shorter term when their income increases or interest rates improve.

Your alternative is not buying at all. If the choice is between a 50-year mortgage and continued renting with no equity building, the mortgage might edge ahead: but barely.

The Problems Nobody's Talking About

Beyond the obvious cost issues, 50-year mortgages create some less-discussed problems:

Age-related challenges: If you're 35 when you buy, your mortgage won't be paid off until you're 85. This could complicate retirement planning and create financial stress during your later years.

Fun fact: Most homeowners stay in their home an average of 10-12 years. 

Availability: May potentially come with stricter requirements and higher fees.

Refinancing difficulties: If you need to refinance later, having such a long remaining term could limit your options or result in higher rates.

Market volatility exposure: Being locked into payments for 50 years means you're exposed to five decades of economic changes, interest rate cycles, and housing market shifts.

Better Alternatives to Consider

Before jumping into a 50-year mortgage, explore these options:

Adjustable-rate mortgages (ARMs): These often start with lower rates than fixed 30-year loans, giving you initial payment relief with the potential to refinance later.

Down payment assistance programs: Many local and state programs help first-time buyers reduce their initial cash outlay, making traditional mortgages more accessible.

See Colorado's DPA resources

New York buyers can explore these DPA programs

Smaller starter homes: Consider a less expensive property that fits a 30-year budget, then trade up later as your income grows and you build equity.

Rate buydowns: Some lenders offer programs where you pay points upfront to reduce your interest rate and monthly payments.

If you're exploring mortgage options and want personalized guidance, check out our mortgage and financing resources for more detailed information.

The Bottom Line

50-year mortgages solve a cash flow problem by creating a long-term wealth problem. While the lower monthly payments might help you qualify for a home purchase, you'll pay hundreds of thousands more in interest and build equity at a fraction of the pace.

The current buzz around these loans reflects genuine affordability challenges in today's housing market, but they're not a magic solution. Before considering this option, make sure you understand exactly what you're trading off and whether alternatives might serve you better.

Key questions to ask yourself:

• Can I truly afford this home, or am I just managing the payment?

• What will my financial picture look like in 20-30 years?

• Are there other ways to make homeownership work with a traditional mortgage? Creatively?

• Do I have a realistic plan for building wealth despite the extended debt timeline?

The housing market is complex, but your mortgage decision doesn't have to be overwhelming. Take time to run the numbers, consider your long-term goals, and make sure any loan: whether 5, 10, 15, 30 or 50 years: truly fits your financial future, not just your current budget.

Seller Concessions Made Simple: What Savvy Buyers Use to Save Big

Here's the truth about seller concessions: there aren't really any "secrets" that experts are hiding from you. What's happening is that many home buyers simply don't understand how powerful these negotiation tools can be or how to use them strategically in today's shifting market.

As a real estate professional working with buyers in different markets, I've seen too many people miss out on thousands of dollars in savings simply because they didn't know how to leverage seller concessions effectively. Let's change that.

What Are Seller Concessions, Really?

Seller concessions are payments made by the home seller at closing to cover costs that would normally come out of your pocket as the buyer. Think of them as the seller's contribution toward your closing costs and other items such as title insurance, attorney fees, or even necessary repairs. 

Here's what makes them different from a simple price reduction: when you negotiate $5,000 in seller concessions on a $300,000 home, the recorded sale price stays at $300,000. The seller just contributes that $5,000 toward your closing expenses. This distinction matters more than you might think because it affects future property valuations and your home's equity.

The key thing to understand is that concessions aren't charity. They're strategic business decisions that can benefit both you and the seller when structured correctly.

Why Market Trends Are Making Concessions Your New Best Friend

The real estate landscape has shifted dramatically over the past couple of years, and smart buyers are using this to their advantage. Here's what's happening in many markets right now:

Rising Interest Rates Are Creating Opportunities

Higher mortgage rates have cooled buyer demand, giving you more negotiating power than buyers had in 2021-2022. Sellers who once received multiple offers over asking price are now more willing to negotiate: including offering concessions to make their properties more attractive.

Inventory Is Normalizing

Many areas are seeing more balanced inventory levels. This means sellers can't be as picky as they were during the peak buying frenzy. They're more open to concession requests that help close deals.

The Negotiation Tactics That Actually Work

Let's get into the practical stuff: how to actually use seller concessions in your negotiations without shooting yourself in the foot.

Start With Your Pre-Approval Strategy

Before you even start looking at homes, get pre-approved and understand exactly what your closing costs will be. This gives you a target number for concession negotiations. If you know your closing costs will be around $8,000, you can confidently request that amount (or close to it) in concessions.

Get pre-approved first to strengthen your negotiating position.

The "Win-Win" Approach

Instead of demanding concessions, frame them as a solution that benefits both parties. For example: "We love this house and want to move forward. To make the numbers work for us, would you consider $6,000 in seller concessions to cover our closing costs? This way we can close on your preferred timeline."

Use Market Conditions to Your Advantage

In a buyer's market (common in certain price ranges and neighborhoods), you have more leverage. Don't be afraid to ask for concessions, especially if the home has been on the market for a while.

The Strategic Offer Structure

Here's a tactic many buyers don't know: sometimes offering a slightly higher purchase price with seller concessions can work better than a lower offer. Why? Because it helps the seller feel like they're getting closer to their asking price, while you're still getting the financial help you need. After all, seller concessions come out of the seller's net proceeds. 

Local Factors That Impact Concessions

Every market has quirks that shape how concessions work:

Urban vs. Suburban vs. Rural

Closing costs and demand vary by location. In high-demand urban cores, concessions may be smaller; in suburban or rural areas, sellers may be more flexible. Keep in mind, this is not a rule, just an observation. 

New Construction vs. Resale

Builders often offer concessions (sometimes called "builder incentives") such as closing cost credits, rate buy-downs, or limited-time upgrades. Resale sellers may be more focused on price, timing, or repair credits.

Seasonality and Days on Market

Market activity ebbs and flows throughout the year. Homes listed during slower seasons or those on the market longer than the average often present stronger opportunities to negotiate concessions.

Property Type and Rules To Know

Different property types and local regulations can affect concessions:

Condo, Co-op, and HOA Rules

Some communities and co-op/condo associations have guidelines or limits on concessions. Your agent and lender can help you confirm what's allowed before you negotiate.

Regional Cost Variations

Attorney fees, taxes, and title costs vary by state and county. In higher-cost areas, even a modest concession can cover meaningful expenses.

Demand Differences by Area

Dense, high-demand neighborhoods may see fewer concessions, while surrounding areas with more inventory often see more flexibility.

What You Need to Know About Limits

Here's where many buyers get tripped up: seller concessions have limits based on your loan type and the percentage allowed is based on the purchase price. Please confirm these limits with your realtor and lender!

Conventional Loans

• Less than 10% down: 3% concessions maximum

• 10-25% down: 6% concessions maximum

• Over 25% down: 9% concessions maximum

FHA Loans

• Maximum 6% concessions regardless of down payment

VA Loans

• Maximum 4% concessions

These limits exist to prevent artificial inflation of property values. Understanding them helps you negotiate within realistic boundaries. 

Beyond Closing Costs: Creative Concession Ideas

Smart buyers think beyond just closing costs. Here are other ways to use seller concessions:

Home Warranties

Ask the seller to purchase a one-year home warranty. This typically costs $500-800 but provides peace of mind on major systems and appliances.

Necessary Repairs

If the inspection reveals issues, negotiate for the seller to provide concessions equal to estimated repair costs rather than asking them to complete repairs themselves.

Rate Buy-Downs

In higher interest rate environments, some sellers will provide concessions that you can use toward buying down your mortgage rate. This can be a temporary or permanent buydown. 

Making Your Offer Stand Out

When multiple buyers are competing, here's how to structure concession requests that sellers actually accept:

Be Reasonable

Don't ask for the maximum allowed concessions unless you truly need them. Sellers appreciate buyers who ask for what they actually need.

Provide Documentation

If you're asking for specific concession amounts, it could help to show the seller estimates or documentation of your actual costs.

Offer Flexibility

Consider saying something like: "We're requesting $4,000 in concessions, but we're open to discussing the final amount if needed to make this work for both of us."

The Bottom Line for Home Buyers

Seller concessions aren't secrets: they're standard negotiation tools that can save you thousands of dollars when used correctly. In today's conditions, buyers in many markets have more opportunities to negotiate concessions than they've had in years.

The key is to be strategic: know your actual costs, understand current market dynamics, and present requests as solutions that benefit both sides. Whether you're buying in a city center, suburb, or small town, these tactics can help you keep more money in your pocket at closing.

Remember, every negotiation is different, and local conditions can change quickly. Working with an experienced real estate professional who understands your local market is always a smart move.

Take Control: Shop Around for Your Mortgage

Comparing lenders puts you in control of your budget and long-term wealth. Today, there are tons of different loan products out there and since interest rates can go up or down, a 0.25% difference can mean $50–$100+ per month and tens of thousands over the life of the loan depending on the loan type. Here’s a simple plan to save more and feel confident.

Your Home Loan Comparison Plan in 4 Easy Steps

1. Get at least 3 written Loan Estimates. When applying, make sure to be consistent with the information you submit so you are comparing “apples to apples”.

2. Compare “apples to apples”:

   1. Loan type (ie: FHA, VA, Conventional, USDA, Jumbo, etc) will determine your true costs. As an example, FHA loans have a 3.5% down option while VA loans have no down payment requirement.

   2. APR or annual percentage rate is the total annual cost to borrow.

   3. Down Payment and closing costs will vary depending on loan type and borrower profile.

   4. Additional points or fees for things like rate buydowns or rate locks, if applicable

3. Choose the best overall fit: monthly payment, cash to close, timeline, service and accessibility. Then lock.

Pro tips

• Apply within a 2-4 week window so multiple credit checks count as one.

• Include banks, credit unions, online lenders, and brokers for a wider view. Each of these have their pros and cons. Outside of financial considerations, take into account client-centric service and their availability/accessibility to you outside of normal business hours (offers are often written and submitted during this time)

Need help?

If you have questions, we’re here to help and point you in the right direction—free and no obligation. Tell us what you think, or reach out anytime at consumershomeresource.com/contact .