For decades, the magic credit score number for homebuyers was 620.
That FICO score was typically seen as the minimum needed to qualify for a conventional mortgage, a line between who could move forward and who couldn’t (1).
As the mortgage industry heads into 2026, that rulebook is starting to change. Lenders and regulators are moving away from relying on a single credit score and toward a new type of credit score that takes a broader look at how borrowers manage their money over time.
The change won’t make mortgages easier to get overnight and won’t guarantee approvals for riskier borrowers. But it could open the door for would-be buyers who have been paying their bills on time, paying down debt and improving their finances without seeing their traditional credit score change.
Here’s what’s driving the change, how the new scoring models work, and what it means for homebuyers.
More than half of U.S. mortgages are backed by Fannie Mae and Freddie Mac, the two government-sponsored enterprises overseen by the Federal Housing Finance Agency (FHFA). Together, they set the rules for what are known as conforming mortgages, which are the standard home loans used by millions of buyers each year.
In November 2025, Fannie Mae removed its long-standing minimum credit score requirement from its Selling Guide. Instead of linking eligibility to a single cutoff, lenders are now encouraged to assess borrowers by using a wider mix of factors, including cash reserves, debt levels, loan purpose and property characteristics.
This move highlights a push across the housing industry to modernize how credit is evaluated. According to FHFA, consumers like renters and younger borrowers can show their financial responsibility in ways that wouldn’t typically be captured by traditional scoring systems.
With this change, mortgage lenders are beginning to test newer credit scoring models such as FICO Score 10T and VantageScore 4.0 (2). Unlike traditional scores, these models rely on “trended data,” which looks at how borrowers manage credit month after month. This could include whether balances are shrinking, payments are made consistently, and if debt is moving in the right direction.
In some cases, the models can also incorporate alternative credit data, such as rent, utility and phone payments. These are expenses that many households pay reliably, but haven’t historically counted toward mortgage decisions.
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FICO estimates its newer model could lead to up to 5% more mortgage approvals, especially among first-time buyers, renters, young adults and borrowers with thinner or improving credit profiles.
But regulators and lenders are quick to draw a line. Income verification, debt-to-income limits and down payment requirements are factors that will still remain firmly in place.
“Our underwriting standards are the same,” FHFA director William J. Pulte shared on X. “As a process matter, to ensure two scores can be used and not just one, we eliminated [the] requirement for FICO in the infamous ‘guide’. Big deal for consumers. Small or nothing deal for underwriting.”
Despite the changes underway, the mortgage system isn’t flipping a switch overnight.
Lenders still get to decide which credit models they use, and many continue to rely on traditional FICO scores, especially when it comes to standard conforming mortgages (3). While more than 40 lenders had adopted FICO Score 10T as of early 2026, most are using it for non-conforming products like home equity lines of credit, not everyday home purchase loans (1).
If you’re a prospective homebuyer, here are some practical takeaways:
One number doesn’t tell the whole story. Lenders are paying closer attention to patterns like regular on-time payments, improving balances, and consistent credit use, instead of relying on just a single score on one day (4).
Good credit still saves money. Higher scores can still result in lower interest rates, smaller down payments and lower mortgage insurance costs, even with changes that are happening to underwriting.
Do your research. According to Experian, nearly a quarter of today’s renters have been denied a mortgage or rental application because of their credit score (5). That’s where doing research matters, as some lenders accept alternative credit data (like rent or utility payment) while others don’t. Borrowers who don’t have much credit history or who have nontraditional credit may need to shop around.
Focus on the fundamentals. Gradual progress and responsible long-term habits such as paying balances down and avoiding missed payments can carry more weight than quick fixes.
This change highlights how mortgage underwriting is showing signs of becoming more nuanced. Lenders may be better equipped to recognize steady financial improvement, instead of just looking for a high credit score when they decide who qualifies for a home loan. But for homebuyers heading into 2026, keep in mind — it’s still up to the lender’s discretion.
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Yahoo Finance (1); Fannie Mae (2); U.S. Federal Housing (3); Consumer Financial Protection Bureau (4); Experian (5)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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