Short YouTube commentary (Derek McGowan) clarifying headlines that Fannie Mae "removed" a 620 minimum for conventional loans. The speaker explains that in practice lenders rarely approved conventional loans at 620 without large down payments, and that the material change is Fannie Mae’s algorithm now factors in on-time rent and utility payments—improving some borrowers' chances for conventional financing.
Think a 620 credit score is now your golden ticket to a conventional loan? Hold on. The truth might surprise you. You might have saw the headlines that Fannie Mae has now removed their minimum 620 credit score for conventional financing. But here's the real story. It's been quite a few years since any lender's seen Fannie Mae approve somebody at that credit level for conventional financing unless they had a very substantial down payment. The real win here is Fannie Mae has tweaked up their algorithm. They now are giving credit for those that have paid their rent and utilities on time. They didn't used to do that. Now that shows as a positive factor towards their credit profile. Those people have a better ch of getting conventional financing now. So that's the big win and the real takeaway from this headline.
