Starting November 16, 2025, Fannie Mae, one of the U.S.’s key government-sponsored enterprises, will no longer enforce its long-standing minimum credit score requirement of 620 FICO® for loans processed through its automated underwriting system. This change marks a significant shift in the eligibility criteria for home loans, potentially unlocking opportunities for many homebuyers who previously struggled to meet the strict credit score thresholds.
The decision to remove the minimum credit score requirement reflects a broader evolution in how lenders assess risk, moving beyond reliance on a single numerical benchmark. According to industry experts, the new guidelines, released in Fannie Mae’s November 2025 Selling Guide, suggest a more nuanced approach to risk evaluation, incorporating a variety of factors beyond credit scores alone. This could include debt-to-income ratios, savings history, and other financial indicators that provide a more holistic view of a borrower’s ability to repay a loan.
For both real-estate professionals and prospective homebuyers, this policy update represents a potential relief for those who have faced barriers to homeownership due to credit-score-based restrictions. By eliminating this threshold, Fannie Mae’s move could encourage a new pool of buyers to enter the market, particularly those with less-than-perfect credit histories but strong overall financial profiles. As a result, homebuyer activity could increase, especially in markets where access to financing has traditionally been more limited due to rigid credit requirements.
While the policy change is seen as a positive development, it does come with implications for lenders and the broader housing market. Lenders will need to adjust their risk models to accommodate the new guidelines and ensure they’re offering loans to borrowers who are financially capable but might not meet the previous credit score standards. The removal of the credit score threshold is expected to be closely monitored, with some experts noting that it may lead to greater competition among lenders for new buyers while also providing the opportunity to address existing disparities in homeownership access.
As of early November 2025, mortgage rates in the U.S. remained near their lowest levels for the year, with the average rate for a 30-year fixed loan hovering around 6.22%. This trend, while slightly higher than previous weeks, still represents a favorable environment for homebuyers compared to the highs seen in past years. The low mortgage rates, coupled with Fannie Mae’s updated underwriting guidelines, have created a unique set of dynamics in the housing market.
However, even with these favorable financing conditions, affordability remains a challenge. The national median price for existing single-family homes reached approximately $426,800 in the third quarter of 2025, marking a 1.7% year-over-year increase. While this price rise is relatively modest, it highlights the ongoing challenge of rising home prices in many regions, which continues to outpace wage growth for many potential buyers. The combined pressure of high home prices and relatively high mortgage rates has left some buyers in a difficult position, even as mortgage rates remain low.
This complex housing environment has shifted buyer behavior, with many buyers opting for smaller homes or more affordable areas. In some regions, there has been a tightening of inventory, further exacerbating the affordability challenge. Real-estate professionals are reporting that buyers are adjusting their expectations, considering different types of properties, or looking to regions with lower price points.
The interplay of low mortgage rates, rising home prices, and evolving underwriting standards suggests that the residential housing market is entering a nuanced phase. On one hand, the new Fannie Mae guidelines could provide broader access to home loans, opening doors for more buyers. On the other hand, the ongoing affordability issues and high home prices are likely to continue shaping the market. As 2025 draws to a close, it seems that the market is adjusting to a new balance between access to credit, home prices, and the realities of mortgage financing in a high-rate environment.
For both buyers and real-estate professionals, the coming months will likely require strategic adjustments. Buyers will need to carefully consider their financing options and expectations around home prices, while industry experts will need to navigate the shift in buyer behavior and inventory constraints. The market’s future direction will largely depend on how these forces evolve, especially as the effects of changing credit requirements and low mortgage rates play out.
