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A New Era in Conventional Underwriting: How Fannie Mae’s DU 12.0 Changes Will Expand Homebuying Opportunities

For decades, one of the key hurdles for many would-be home-buyers was a hard cutoff: a minimum credit score (traditionally 620) required for eligibility under conventional underwriting. Now, beginning mid-November 2025, that barrier is being removed by Fannie Mae. The changes are significant, signal broader shifts in mortgage eligibility, and demand attention from lenders, brokers, and borrowers alike.

What’s Changing?

Effective for new loan case-files submitted to the automated underwriting engine Desktop Underwriter (DU) on or after November 16, 2025, Fannie Mae will no longer apply a minimum credit-score threshold (such as the longstanding 620 mid-score/average-score requirement) to conventional loans. 
 

In Fannie’s own words:

• “The minimum representative credit score requirement of 620 for loan case-files for one borrower and minimum average median credit score requirement of 620 for more than one borrower will be removed for new loan case-files created on or after Nov. 16, 2025.”
• DU will instead rely on a “comprehensive analysis of risk factors” (credit risk + non-credit risk factors) to assess borrower eligibility.  

Importantly, while the hard credit-score floor is gone, credit scores are not entirely eliminated from the process; rather, they become one input among many. 

Other key elements of the update include:

• New documentation requirements for borrowers without traditional credit (no installment account or traditional credit history) will be triggered only when such absence is true.
• The changes apply to loan case-files created/submitted on or after Nov. 16 (with some technical roll-out beginning the weekend of Nov. 15). 

Why It Matters

1. Expanded access for credit-challenged borrowers
Those in the 580-619 FICO band (or with thin or non-traditional credit histories) may now find conventional underwriting more accessible. Industry commentary notes that this update “opens opportunities for borrowers with thin and no credit files.” 

2. A shift toward holistic risk assessment
Rather than relying on a single three-digit cutoff, DU’s new logic will evaluate multiple factors: credit history details, reserves, debt-to-income, property and loan characteristics, etc. 

3. Competitive and equity implications
This change signals that the GSE underwriting landscape continues to evolve. Some commentators see this as a move toward more inclusive access to mortgages, especially for underserved markets. 

What It Doesn’t Mean (Important Caveats)

• This is not a free pass for all low-score borrowers. Even though the 620 minimum is removed, compensating factors must still be strong: solid reserves, low DTI, employment stability, clean credit history, etc. As one commentary warns: “While Fannie and Freddie are scrapping a minimum credit score … chances are most approved loans will still have a 620+ credit score.”
• Individual lenders and mortgage insurers may retain overlays (higher minimums or additional requirements) for some time. The guideline change doesn’t instantly override all business-decisions and policies.
• The change applies to loans under DU (automated underwriting). Manual underwriting paths, specialty programs, or non-GSE channels may still operate under older or different rules. 

What Should Loan Officers, Brokers & Borrowers Do?

Review previously declined files: If a file was “refer/ineligible” purely due to being below 620, and otherwise strong, consider rerunning through DU after Nov. 16 with updated documentation.

Highlight compensating strengths: Large reserves (months of cash/assets), stable income/employment, low debt-to-income ratios, strong payment history, property type, loan purpose — these will matter more than ever.

Update borrowers: Make sure borrowers understand that this is a change in eligibility rules, but not a guarantee of approval. Emphasize that credit scores still matter.

Monitor lender overlays and insurer rules: Just because Fannie Mae has updated its automation doesn’t mean every lender immediately drops overlays or insurer minimums. Ask about the lender’s policy and the applicable mortgage-insurance guidelines.

Prepare for operational change: Systems, underwriting workflows, overlays and training may all need updates to reflect the new DU logic (Version 12.0).

Looking Ahead: What to Watch

• Will Freddie Mac adopt the same or similar change in its Loan Product Advisor system and what the timing will be.
• How mortgage insurers respond: 
  If underwriting shifts to a broader-risk view, will pricing change for borrowers under 620? Will insurers create new tiers?
• The performance of loans approved under the new logic: 
  Will default/delinquency trends remain stable? Early analyses by Fannie suggest minimal risk increase, but long-term data will be closely watched.
• Market messaging and borrower education: 
  With change come potential misunderstandings (“I can get a loan with any score now!”). Clear communication will be key.

Conclusion

The upcoming rollout of DU Version 12.0 marks a noteworthy shift in conventional loan underwriting: the end of a hard 620-score barrier and the rise of a more nuanced, risk-factor-based approach. For many borrowers previously sidelined by score alone, it opens new possibilities. For lenders and loan-officers, it demands refreshed understanding, updated workflows and clear communication. And for the industry at large, it signals how technology and data continue to reshape home-loan access.

As always, though, underwriting is far from “anything goes.” Borrowers will still need to demonstrate strength in multiple dimensions — but for many, there’s now a clearer path forward.

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