One of the biggest real estate industry changes in years is barely getting noticed. On November 16, 2025, Freddie Mac and Fannie Mae—the two GSEs that own or guarantee roughly half of all U.S. mortgages—eliminated their minimum FICO score requirements for loans approved through their automated underwriting systems.
For two decades, the answer was automatic: "You need a 620-credit score for a conventional loan." It wasn't a guideline. It wasn't negotiable. It was the law.
That law is officially dead.
This doesn't sound like much. Until you realize it is. And then it sounds like nothing again.
Automated Underwriter
Some of you have seen or heard about "DU approved files" and know they're preferable to see as they are partially underwritten—by a software program; real people look at the files further along in the process.
When you apply for a conventional mortgage, your loan file doesn't go straight to a human underwriter. It goes first to an automated underwriting system (AUS)—Desktop Underwriter (DU) for Fannie Mae loans, Loan Product Advisor (LPA) for Freddie Mac loans.
These systems are software frameworks that pull your credit report, review your income documentation, calculate your debt-to-income ratio, and run the numbers against thousands of data points. Then they spit out a decision: Approve/Eligible, Suspend, or Decline.
A FICO score below 620 was an automatic decline—meaning a human underwriter never saw it—there was no extenuating circumstances that would change that simple fact.
Changes
Fannie Mae and Freddie Mac removed their explicit 620 minimum FICO score requirement. Loans below 620 are now evaluated case-by-case instead of automatically declined.
Credit scores still matter and still drive approvals and pricing. The floor is gone, but scores remain a key underwriting factor alongside income, reserves, and payment history. Lenders can still impose their own 620 minimums.
Just Because it’s Allowed Doesn’t Mean it’s Appropriate
Here's the critical detail most people miss: Fannie Mae and Freddie Mac set the secondary market requirements, not the retail lender requirements. Your bank, credit union, or mortgage broker can impose stricter standards than the GSEs allow.
A lender can say "Fannie and Freddie will consider a 600 score, but our company requires 620 minimum." That overlay is completely legal and increasingly common. Some lenders have already signaled they're keeping their own 620 floors regardless of what the GSEs now permit.
But for every lender that stays sane we’ll find two that won’t.
Flashbacks
This easing of the lending requirements reminds me of the 2008 mortgage meltdown; if you could fog a mirror, you could get a mortgage; it makes me worried.
The 620 minimum removal isn't happening in isolation. It's part of a broader pattern. Non-QM lenders are back and thriving. Portfolio lenders are offering programs with minimal documentation. Stated Income, Stated Asset (SISA) loans and "no doc" options are creeping back into the market under different names. Debt-to-income ratios are stretching. Down payment requirements are falling.
In 2005-2007, we told ourselves the same story: "Risk-based pricing will handle it. Borrowers will self-select. The market is smarter now." Then 2008 happened.
I'm not saying we're headed for another meltdown tomorrow. But the playbook looks familiar. When you remove objective barriers to entry (like a 620 minimum) and rely instead on lenders to price risk accurately, you're betting that lenders will make rational decisions. History suggests they won't—especially when loan origination fees are involved and the loans get sold off to the secondary market within 30 days.
The GSE change itself isn't reckless. Removing 620 and relying on full-file underwriting is smarter than a bright-line rule. But the context in which this change is happening—loosening standards across the board, SISA products returning, stated income making a comeback—that context should concern anyone who was paying attention in 2007.
