Fannie Mae Credit Changes for Multiple Borrowers

[Gaetano Ciambriello]

For most loans with multiple borrowers, Fannie Mae will no longer use the representative ( = lower) credit score to confirm mortgage loans comply with their minimum 620 credit score requirement. For these loans, Fannie will use an average median credit score.

Previously, if you had a borrower with 580, 600 and 620 scores and another borrower with 700, 720 and 740 scores, you would use the lower of the two middle scores which is 600. Now, you will average the two middle scores (600 and 720) and the representative score is 660.

This goes into effect on September 18th. It is a huge boost for anyone who makes a lot of money, but does not have strong credit. By adding a co-borrower with strong credit, they may be able to qualify. Previously, adding a co-borrower with strong credit would not matter because you took the lower of the two scores and not the averages.