Fannie Mae & Freddie Mac Boldly Remove Minimum FICO Requirements—Here’s Why That’s a Big Deal

Remarkably, 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. Strong compensating factors have the largest impact toward obtaining A/E findings—e.g., larger down payments, shorter terms, excess assets, etc.

Within the first week, some top national lenders reported the following:

Many approved applications came in with sub-620 FICOs—roughly 6% of overall application volume—with some as low as 490.

Several brokerages have already begun reevaluating their “fallout” files from the last 60 to 180 days, finding early wins among clients previously declined due to credit.

The 620 minimum credit score requirement—both for single borrowers and the average median score for multiple borrowers—was eliminated for new loan casefiles created on or after Nov. 16, 2025.

Why Does This Matter to Investors?

The Trump administration is making a concentrated effort to loosen credit and make borrowing more accessible and affordable.

Another example of expanding affordability is 50-year mortgages and, perhaps more important, mortgage portability. There are active discussions on how to enable homeowners to take their mortgages with them, similar to how consumers can port their cell phone numbers from carrier to carrier. The plan moves with them instead of the mortgage staying with the property.

This is a novel idea that could have a major impact on inventory. It is estimated that one-third of U.S. borrowers have a mortgage under 4%, creating a “lock-in” effect, with downstream inventory constraints.

By enabling borrowers to port their pandemic-era low-rate mortgages to either a downsized or upsized property, transactional activity would likely increase while relieving price pressures in some regions.

Conversely, there are many considerations for how these programs would be implemented, and whether they would actually level the market or skew favorability toward those with lower mortgage rates.

In the upsizing scenario, guidelines would need to be set for the property type. Could a primary mortgage be ported to an investment property, maybe after a certain period? And if the current loan balance was insufficient to cover the down payment difference on the purchase, will a second-lien program be introduced at more favorable rates? Otherwise, if the spread is large enough, the blended rate could actually be higher than a fresh conventional loan, albeit with the potential for extended amortization.

From a lender and servicing perspective, mortgage notes would be much more likely to be held to maturity, which could influence rates or loan costs, and new guidelines would be instituted for a new class of borrowers.

What to Do Now

Real estate investors should pay particular attention to developments in mortgage markets heading into and through 2026, as any significant revisions to “business as usual” could provide tight windows of opportunity to execute. Think of when rates bottomed during the pandemic, or the recently reimplemented 100% bonus depreciation for qualified and participating short-term rental acquisitions.

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.

Note: if you thought getting qualified residents was hard before - please consider what this might mean for an empty unit you might have in the future.

Interesting.

A portable mortgage is an entirely new concept to me.

IMO many of the things they are trying to do will cause problems. 50 year mortgages...bad idea. Allowing a person to keep their rate and "transfer" the loan to another house? That will cause the banks to raise money other ways...and will likely increase borrowing costs for other buyers.

What they need to do (tongue in cheek) is to have each person who wants to buy a house take a financial literacy test. If they don't pass, they don't get the loan. Too many people out there think they can afford a house they just can't. Few people are willing to start out cheap with something less than their ideal house and build equity, then trade up or remodel their house.

Reminds me of about 2005-2008 when the banks created all those gimmick loans where you did not need a job or even a soc sec number. Anything goes. I see this as typical shortly before a crash.

A couple of thoughts:

--A 50-year mortgage sounds to me like it will essentially become a NNN residential property. Except that I could see people qualifying that don't manage their money well and don't have money for repairs. With no equity in the property for the first 15-20 years, where is the incentive to maintain it?

--I suspect banks take into account that most people don't stay in the same home for 30 years, so that mitigates some of the risk of lower-interest loans. What bank in its right mind would let me transfer my 2.98% mortgage to a different property when they could require me to pay it off and then loan that money out at 6%?

--As other posters pointed out, if anyone with a pulse can get a mortgage, the tenant pool will become shallow indeed.

--This means pain in the short-term for landlords, possibly opportunity in the future. But I could also see institutions purchasing large bundles of foreclosed RE at pennies on the dollar and pushing the small fish out of the pond entirely.

It's only been 17 years since 2008, and they're wanting to make the same mistakes again??

I see this as being not good for both landlords as well as the economy in general.

Admittedly I would consider a 50 year mortgage on an investment property for the CF it provides.

Maybe I am just being greedy by not wanting the credit score to be dropped for new mortgages. But honestly it just points to another crash brought on by mismanagement.

How can anyone justify allowing you to move your mortgage to a different property? I realize that there are commercial loans that bundle properties. So in essence you could pull one property out and add another in. But to do so on a SFH? I see that as a big loss of income for the banks.

Say a 30 something person buys a house and gets a 50 year mortgage. Then 30 years in they decide to downsize for retirement. The loan moves with them and now they are set until they are 80 with the same rate and all that is involved.

Wow, this is the silliest thing I have read in a while.

50 year mortgage means a lifetime of debt if the public uses it to artificially inflate affordability - that is what the politicians are trying to do.

The difference in monthly payments would be so slight.

Happy to say that my primary residence is free and clear, except for the property taxes of course.

I would not consider getting a loan against it. I did with my last place. I even had a HELOC on it that was bigger than the loan was.

But those days are in the past now.

There's really not a huge difference between a 30 and 50 year mortgage payment. Here are some numbers at 7.5% on 200,000:

30 year: $ 1,398.43

50 year: 1,280.47

Just for kicks, I ran the payment for a 100 year term as as well. Monthly payment is 1250.00. Total interest over the term is 1.3 million. Here are the total interest numbers for 30 and 50:

30 years: 303,434

50 years: 568,282

GKARL, why do you have to throw common sense into the mix?