Credit score to buy a home in 2026: the 620 rule is gone

Buying a home in 2026 no longer hinges on clearing one magic number. For years the rule was simple: reach a FICO score of 620 and a conventional loan was yours. That benchmark is fading. The Federal Housing Finance Agency oversees Fannie Mae and Freddie Mac, and it has ordered both to broaden the credit scoring models they use. Fannie Mae dropped its score floor for conforming loans on Nov. 15, 2025. Conforming conventional loans financed 56.5% of U.S. home loans in 2024, so the shift reaches most buyers, not a narrow slice.

Two newer scoring models, FICO 10T and VantageScore 4.0, are moving into mortgage underwriting at the same time. Trended data in both records whether a borrower's balances shrank or grew month by month, so two applicants with identical scores today can look different to a lender. Both models also count alternative data drawn from rent, utility, and phone payment records. FICO has said the approach is meant to widen credit access for renters, young adults, and people buying a first home — the groups most likely to have thin files. Adoption so far has clustered among community lenders, and those early users have applied the model to loans outside the conforming system.

Credit scores have not stopped mattering. FHFA Director William J. Pulte has said underwriting standards themselves are unchanged. Lenders still use scores to price interest rates, set down payment expectations, and calculate private mortgage insurance premiums. The FHA, VA, and USDA programs set their own requirements, including the FHA's 580 threshold for a 3.5% down payment. Lenders also remain free to apply classic FICO cutoffs of their own. What follows breaks down the credit score to buy a home in 2026 across five parts: the end of the 620 rule, the new scoring models, government loan requirements, how scores set loan pricing, and which lenders already accept alternative credit data.

Illustration: Quartz

Fannie Mae removed its minimum credit score requirement for conforming conventional loans in a Selling Guide update that took effect Nov. 15, 2025. A single FICO cutoff no longer decides whether a borrower gets evaluated at all.

Under the old policy, an applicant had to clear a set score before the company would run a credit risk assessment on the file, as Yahoo Finance reported. Fannie Mae said the revision keeps its risk analysis "agnostic of third-party credit scores," so nobody is screened out automatically for landing a few points under a fixed line.

Risk decisions now draw on a wider set of inputs. Fannie Mae has pointed to borrower reserves, overall debt levels, the characteristics of the property being financed, and the purpose of the loan as the factors shaping an assessment.

The scope is specific. Conforming conventional loans are the mortgages Fannie Mae and Freddie Mac buy, and in 2026 that generally covers a home valued under $832,750 financed without an FHA, VA, or USDA program behind it. Jumbo borrowers and government-loan borrowers sit outside the rule entirely.

FHFA Director William J. Pulte has pushed back on the idea that approval standards have loosened. He wrote that the underwriting bar had not moved, describing the change as a process adjustment that clears the way for two credit scores to be used in an evaluation instead of one — a significant development for consumers, and close to a non-event for underwriting itself.

For buyers, the change works at the infrastructure level rather than the loan desk. A thin credit file no longer blocks eligibility before a lender reviews reserves, income, and debt. Lenders still choose which scoring model to use, still set their own overlays, and many are not ready to drop a qualifying score requirement of their own.

Illustration: Quartz

FICO 10T and VantageScore 4.0 judge borrowers on patterns rather than a single-day snapshot, and both are available to mortgage lenders now. Each model reads credit behavior over months and pulls in payment records that standard credit reports leave out.

Trended data is the first difference. Rather than recording only what a borrower owes on the day a report is pulled, these models track how balances have moved across previous months. Two applicants can carry identical scores and identical current balances while telling opposite stories. One has been paying a card down steadily; the other has revolved the same debt at the minimum. Older scoring treats them the same. Trended data does not.

Alternative data is the second. Rent, utility, and phone service payments rarely appear in a traditional credit file. That leaves renters who have never financed a car or a home nearly invisible to underwriting software. Both models can count those payments as evidence of reliability.

FICO has said the 10T model produces as much as 5% more approvals than the scoring methods it replaces. The company reported more than 40 mortgage lenders had picked it up as of early February 2026, most of them community lenders serving borrowers the mainstream market overlooks. FICO has also cited Spring EQ, the first home equity line of credit lender on 10T, as an example of a lender approving applicants it would otherwise turn down. Its stated aim is wider credit access for renters, younger borrowers, and first-time buyers.

Lenders adopting 10T have mostly used it outside the conforming market, on loans Fannie Mae and Freddie Mac do not purchase, so its reach into mainstream conventional lending stays small. Adoption remains a lender-by-lender choice, so two lenders reviewing the same file may score it differently.

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Government-backed mortgages run on separate rules from the conforming loan system, so Fannie Mae's decision to drop its minimum score changes nothing about how an FHA, VA, or USDA loan gets evaluated in 2026. Each program sets its own credit standards.

The FHA, administered by the Department of Housing and Urban Development, sets the clearest thresholds. A borrower with a score of 580 or higher can qualify with a down payment as low as 3.5%. Scores between 500 and 579 still qualify under FHA rules, but the down payment requirement rises to at least 10%, and those files typically draw closer manual review from the lender.

VA loans work differently. The Department of Veterans Affairs sets no credit score minimum for eligible veterans, active-duty service members, and certain surviving spouses. The VA guarantees part of the loan rather than issuing it, which leaves the scoring decision to the lender. Minimums in the 580 to 620 range are common, and they vary enough that two lenders can reach opposite conclusions on the same borrower. A VA borrower turned down by one lender can sometimes qualify by applying elsewhere.

USDA loans, meant for buyers in eligible rural and some suburban areas, follow a similar pattern. The agency imposes no blanket score floor, but participating lenders generally want 640 or higher to run a file through the program's automated underwriting system. Below that mark, a borrower can still be approved through manual underwriting, which demands more documentation and takes longer.

The practical consequence is that these three programs often remain the realistic route for a buyer whose score falls short of a given lender's internal conventional standard. Each carries non-credit conditions — occupancy rules, property type restrictions, income caps or geographic eligibility — that a borrower has to satisfy alongside the credit requirement.

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A credit score no longer decides whether a conforming loan application gets a look, but it still decides what that loan costs. Rate, fees, down payment size, and mortgage insurance premiums all move with the number on the report.

Mortgage pricing is risk-based, so lenders quote different rates to borrowers whose credit profiles differ even when the house, the loan amount, and the term are identical. Small gaps in rate compound over a 30-year term into a large difference in total interest paid. Lender fees follow the same logic, and borrowers with stronger credit tend to see fewer pricing adjustments added to the quote.

Down payment expectations move in the same direction. A higher score can give a lender room to accept less cash at closing, because a solid payment record supplies some of the reassurance a larger equity cushion otherwise provides. Borrowers with weaker or thinner credit are more often asked to bring more money to the table.

Private mortgage insurance is the third pressure point. Conventional borrowers who put down less than 20% generally carry PMI until they build enough equity to cancel it. Premiums for that coverage are priced in tiers tied to credit score. Two buyers making identical down payments on identical homes can pay different monthly amounts for it.

Competition among lenders matters here too. A strong score widens the field of lenders willing to make an offer, which gives a borrower leverage to compare quotes and push on rate or closing costs. A thin file narrows that field and shrinks the room a borrower has to negotiate.

Fannie Mae removing its score floor took away one gate. It did not take credit scores out of the math that sets what a specific borrower pays each month.

Illustration: Quartz

Guild Mortgage and AmeriHome both work with applicants who document credit through nontraditional records, so a buyer with a thin file or no score has somewhere to apply rather than an automatic dead end. VantageScore estimates roughly five million prospective buyers stand to gain from the newer scoring models.

Applying this way means proving the payments a standard credit report tends to ignore. A lender may ask for rent receipts or canceled checks, utility account statements, and phone service billing records, since that paperwork substitutes for a conventional tradeline. A letter from a landlord and bank statements showing steady transfers can serve the same purpose.

Vishal Garg, founder and chief executive of Better Mortgage, told Yahoo Finance that the newer models matter because they track the way households actually handle money now. He said the older scoring framework predates the digital spending records lenders can pull today, and that watching balances and payments shift month to month tells a lender more about repayment risk than a single number does.

Ask directly when shopping for a loan. A loan officer can say whether the company underwrites with FICO 10T, VantageScore 4.0, or a manual review of nontraditional credit references, and whether that applies to the loan product in question. Lenders keep the right to stay with classic FICO scoring, and plenty have.

One boundary is worth knowing before any of this starts. The 2026 conforming loan limit of $832,750 marks where the flexibility ends across most of the country. Above that figure, the financing becomes a jumbo loan, which sits outside the Fannie Mae and Freddie Mac framework and generally carries stricter credit, reserve, and down payment requirements set by the individual lender.