Big News: Fannie Mae Removes Credit Score Requirement.Here’s What It Means for NJ Buyers & Sellers

A major change in mortgage lending just went into effect, and it could shape the real estate market in a big way. Fannie Mae, one of the largest government-backed mortgage investors, has removed its minimum credit score requirement for loans submitted through its automated underwriting system, known as Desktop Underwriter.

The minimum credit score requirement of 620 will be removed from loan case files starting as soon as November 16, 2025.

Previously, buyers generally needed a score of at least 620 to qualify for a conventional loan through Fannie Mae. That number acted as a hard cutoff, leaving many would-be buyers with thin or limited credit histories unable to access conventional financing. Now, that fixed threshold is gone. The new system will evaluate a borrower’s full financial picture, including income, debt, employment, and assets, instead of relying solely on a single number.

For buyers, this is a meaningful shift. If your credit score is below 620 or your credit file is limited, this change could open the door to conventional loan approval. That means access to better rates, lower mortgage insurance costs, and more competitive loan options compared to some government-backed or non-conforming products. It also means that if you were recently told you didn’t qualify, it may be worth checking again.

That said, underwriting will still be rigorous. Lenders must still pull credit scores, and they will continue to evaluate overall risk, including debt-to-income ratio, job stability, and available savings. Removing the minimum score doesn’t mean anyone can qualify, it simply allows the system to look at borrowers more holistically.

For sellers, this update can also bring opportunity. A wider range of qualified buyers means a broader buyer pool. More people gaining access to conventional loans can strengthen demand and potentially create more competitive offers. Sellers may see an uptick in activity, especially in price ranges that appeal to first-time or moderate-income buyers.

This could also help maintain market stability in areas where affordability has become a challenge. In towns in our area like Rutherford, Lyndhurst, Nutley, Little Falls, etc. buyers who were once just outside the qualifying range may now reenter the market. That’s good news for sellers preparing to list in early 2026, as buyer confidence and purchasing power could improve.

However, it’s important to stay grounded. Individual lenders can still set their own internal requirements, meaning not every lender will follow Fannie Mae’s more flexible standard right away. Each loan will still go through full risk assessment, and credit history will continue to play a role in determining rates and terms.

Overall, this change is a positive one. It opens doors for buyers who may have been unfairly limited by a single score and creates new momentum for sellers in a competitive market. If you’ve been thinking about buying or selling, now is a great time to revisit your strategy with a mortgage advisor or real estate professional who understands how this update could impact your goals.

If you’d like to discuss how this new guideline might affect your buying power or the demand for your home, reply to this email!

I’d be happy to walk you through it!