Fannie Mae Credit Score Requirements

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on August 31, 2023

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Fannie Mae Credit Score Requirements Overview

Fannie Mae, a government-sponsored enterprise, plays a pivotal role in the U.S. mortgage market. When it comes to credit scores, understanding Fannie Mae's requirements is crucial for prospective homebuyers and lenders alike.

For a conventional mortgage backed by Fannie Mae, the minimum credit score typically starts at 620. However, it's worth noting that a higher score might be necessary for specific loan products or to secure more favorable interest rates and terms.

Moreover, other factors, such as the borrower's debt-to-income ratio, down payment size, and overall financial history, will also influence the loan's approval.

While a 620 credit score is often the baseline for Fannie Mae-backed mortgages, borrowers should aim for a higher score to ensure they meet all requirements and secure the best possible loan terms.

How Fannie Mae Uses Credit Scores Works

Loan Pricing and Credit Score

Fannie Mae uses credit scores to determine the pricing of loans. Borrowers with higher credit scores usually secure loans with more favorable interest rates. This is because a high credit score is an indicator of good financial habits, thus, less risk to the lender.

Risk-Based Pricing Adjustment

Risk-Based Pricing Adjustment (RBPA) is a mechanism used by Fannie Mae where adjustments are made to the loan's interest rate based on the perceived risk.

This risk is determined by several factors, one of which is the credit score. Borrowers with lower credit scores generally experience a higher RBPA, leading to a higher interest rate.

Impact of Credit Score on Loan Approval

The credit score significantly influences whether a loan application will be approved or not. Apart from deciding the interest rate, a lower credit score might lead to the rejection of a loan application.

However, Fannie Mae does not solely depend on credit scores for this decision; other factors like income stability, total debts, and savings also play a critical role.

How Fannie Mae Uses Credit Scores

Differences Between Fannie Mae and Other Mortgage Lenders' Credit Score Requirements

Comparison With Freddie Mac

Like Fannie Mae, Freddie Mac also has a minimum credit score requirement of 620 for most of its loans. However, the way both institutions adjust loan pricing based on credit scores might differ slightly. It's advisable to compare offers from both to get the best mortgage deal.

Comparison With FHA Loans

Federal Housing Administration (FHA) loans can be more lenient, permitting credit scores as low as 500 with a 10% down payment.

With a 500-579 credit score, the required down payment drops to just 3.5%. While this offers a great opportunity for those with lower credit scores, FHA loans come with their own set of criteria and additional costs, such as mortgage insurance premiums.

Comparison With VA and USDA Loans

Veterans Affairs (VA) and United States Department of Agriculture (USDA) loans do not have a strict minimum credit score requirement. Instead, they require lenders to assess the entire credit profile of a loan applicant.

Fannie Mae vs Other Mortgage Lenders' Credit Score Requirements

How to Improve Your Credit Score for Fannie Mae Approval

Importance of Credit History and Credit Utilization

A long history of credit use and a lower credit utilization ratio contribute to a higher credit score. Credit utilization refers to how much of your available credit you use.

Keeping this ratio below 30% can significantly improve your credit score, while a long, unblemished credit history showcases financial responsibility.

Strategies for Improving Credit Scores

To improve your credit score, consistently pay your bills on time, reduce your debts, and avoid taking on new debt.

Regularly check your credit report for errors and dispute them if necessary. Furthermore, avoid closing old credit card accounts, as this can decrease your total available credit and increase your credit utilization ratio.

Impact of Paying Bills on Time and Reducing Debt

Making payments on time is the most significant factor that contributes to your credit score. Late or missed payments can severely damage your score.

Reducing overall debt not only lowers your credit utilization ratio but also paints a picture of financial responsibility, boosting your creditworthiness.

Fannie Mae's Role in Addressing Credit Score Inequality

Programs Aimed at Helping Low Credit Score Borrowers

Fannie Mae has introduced programs to assist borrowers with lower credit scores. For example, the HomeReady® program targets low-to-moderate-income borrowers, allowing a lower minimum credit score under certain conditions.

Policy Changes to Create More Opportunities for Low-Credit-Score Home Buyers

Fannie Mae continuously revises its policies to provide more inclusive opportunities for potential homebuyers with low credit scores.

By considering alternative credit data like rental history and utility payments, it seeks to expand homeownership to a more diverse range of borrowers.


Fannie Mae's central role in the U.S. mortgage landscape makes understanding its credit score requisites paramount for potential homeowners and lenders.

With the baseline credit score set at 620, factors such as loan pricing, Risk-Based Pricing Adjustments, and comprehensive credit evaluation interplay in the final loan decision.

While Fannie Mae's requirements are comparable with Freddie Mac and distinct from more lenient institutions like the FHA, the ultimate focus remains on broader financial profiles over mere credit scores.

Emphasizing credit history longevity and prudent credit utilization, prospective borrowers can bolster their scores through timely bill payments and judicious debt management.

Importantly, Fannie Mae's initiatives like HomeReady® and consideration of alternative credit data underline its commitment to address credit score inequality, striving to make homeownership more accessible to all.

Fannie Mae Credit Score Requirements FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.

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