Starting Nov. 15, Fannie Mae is eliminating its 620 minimum middle credit score requirement for purchase and refinance home loan credit decisions.

Fannie is following Freddie Mac’s lead from several years ago when it eliminated a minimum required middle credit score for loan approval.

How does this help buyers? A 1-point difference in credit score — say 619 to 620 — is enough to keep a borrower out of contention for a loan or unable to enter the Fannie Mae process. So, this is good news for those who might be on the credit bubble with a low FICO score but have strong income and cash reserves. It doesn’t automatically rule them out.

Desktop Underwriter is Fannie Mae’s proprietary underwriting engine — the system that no longer requires a minimum third-party credit score, according to its

See Full Page