The Federal Housing Administration (FHA), Fannie Mae and Freddie Mac will be implementing their first new credit score models for mortgages in decades. The change is intended to lower costs.
“Thanks to President Trump’s leadership, we are driving down costs across the homebuying process,” William Pulte, Federal Housing Finance Agency director, said. “We are modernizing credit scoring with more predictive models, helping millions of Americans who responsibly pay rent qualify for mortgages. That’s fair, it’s commonsense, and it’s finally delivering the benefits of competition to homebuyers nationwide.”
Fannie Mae and Freddie Mac now permit the use of VantageScore 4.0 and FICO 10T as eligible credit scoring models. The agency will update the Fannie Mae and Freddie Mac selling guides with the new scores and immediately will begin accepting Vantage-scored loans from approved lenders.
“By embracing additional predictive credit scoring models, we are taking a meaningful step toward expanding access to homeownership – particularly for creditworthy borrowers who may have been overlooked under older systems,” FHA Secretary Scott Turner said. “This exciting announcement is in service to President Trump’s promise to restore the American Dream of homeownership.”
The FHA also permits the use of VantageScore 4.0 and FICO Score 10T in FHA-insured mortgage underwriting.
The update is part of implementing the Credit Score Competition Act of 2018.