New Conventional Loan Rules (620 Minimum is GONE)

You Can Now Qualify for Conventional with Less Than 620

As of November 16, 2025

✅ Fannie Mae removed the 620 minimum

✅ Freddie Mac already did this years ago

✅ Opens doors for thin credit profiles

🏠 Especially helpful for younger buyers and renters

What Changed (November 16, 2025)

The old way:

Credit score below 620? → Automatic rejection from Desktop Underwriter

The new way:

No hard floor → System evaluates your complete credit profile

What they're looking at now:

📊 Payment history

💰 Income stability

💳 Credit mix and utilization

📈 Trended credit data (your credit behavior over time)

🏦 Cash reserves

This Is NOT A Free-For-All

Let's be clear about what this change is NOT:

❌ Not a pass for bad credit

❌ Not "no credit check"

❌ Not loose underwriting

❌ Not a guarantee you'll get approved Don't let social media hype set you up for disappointment.

This DOES help:

👶 Young buyers with thin files

🏢 Renters with consistent payment history but little credit

📱 People who pay everything on time but don't use credit cards much

💼 Stable income, low debt, just not much credit history

The Bigger Picture: How They're Really Looking At You

Moving from score-only to holistic assessment

Old System	New System
Credit score: 615	Credit score: 615
❌ Rejected immediately	✅ Continue to full review
-	• 3 years rent history, always on time
-	• $75K income, DTI 28%
-	• $20K in reserves
-	• Only 2 credit cards, both paid off monthly
-	Possible approval

Trended credit data:

Instead of just seeing you have a $5,000 balance, they see:

📉 You've paid it down from $8,000 → shows responsibility

📈 You only charge what you can pay off → shows control

🔄 You're not riding minimum payments → shows you're not stretched Finally - they see your actual behavior, not just a number.

But Wait-Should You Even Use Conventional?

Just because you CAN qualify doesn't mean you SHOULD

If your score is below 620, FHA is probably still your better option:

	FHA	Conventional (sub-620)
Minimum score	580 for 3.5% down	No minimum, but...
Interest rate	Lower rates for lower scores	Significant hits for sub-620
Mortgage insurance	1.75% upfront + 0.55% annual (typical)	Much higher PMI for sub-620
Underwriting	More forgiving on credit events	Stricter compensating factors needed
Down payment	3.5%	3-5%

🧮

Don't pick the wrong loan just because you qualify. Use my free Loan Comparison Calculator to see which saves you the most money based on YOUR situation.
winthehouseyoulove.com/advisor

When conventional sub-620 might make sense:

💰 You have significant down payment (15-20%+)

🏠 Buying a condo that's not FHA-approved

📊 Very strong compensating factors (high income, low DTI, reserves)

🎯 Credit score is trending up fast and you'll refinance soon Your goal is a house, not just qualifying. Choose the path that saves you money.

🏡 Ready To Start Your Home Buying Journey?

My team helps buyers in 49 states get pre-approved (everywhere except New York).

Here's what makes working with us different:

💳 Soft credit pull - Get pre-approved without impacting your credit score

🎯 Expert guidance - We specialize in helping first-time buyers navigate the process

⚡ Fast turnaround - Get your pre-approval and start house hunting

👉 Get pre-approved today: winthehouseyoulove.com

The Lender Overlay Reality Check

Fannie and Freddie removed the requirement

BUT your lender might not have

🏦 Many lenders still have internal minimums (overlays)

📋 Common lender overlays: 620, 640, or even 660 minimum

💼 Each lender sets their own risk tolerance

What This Means For You

If you're 580-620:

Start with FHA - it's still designed for you and will likely save you money

If you're thin credit (limited history, not bad credit):

🎯 This change opens a new path to conventional

📞 Talk to a lender about your complete profile

📈 Keep building your credit

If you have actual bad credit (lates, collections, etc.):

⏸️ This doesn't really help you yet - focus on repair first

Bottom line:

This is good news for accessibility, but it's not a magic wand. You still need a strong overall profile. And for most first-time buyers with lower scores, FHA remains your best option.

⏰ But What About All The Other Requirements?

Credit score is just one piece of the puzzle. You're probably wondering what else you need to actually qualify.

The good news? Conventional loans have several advantages beyond just credit flexibility - and understanding the complete picture helps you know if it's really your best path forward.