🚨 Low Credit Score? New Rules!
🏡 That Credit Score That Held You Back? Let's Talk.
Remember when getting a mortgage felt like you needed a perfect credit score, a mountain of savings, and maybe a small miracle?
Well, the mortgage industry is finally starting to think outside the credit score box. A few weeks back, I shared how newer credit scoring models and non-traditional credit options are creating opportunities for buyers who don't fit the traditional mold. And this week? One of my lending partners just made another BIG move. United Wholesale Mortgage (UWM) announced on October 7 that it was removing lender-imposed minimum credit score requirements on eligible Conventional, FHA, VA, and USDA loans.
That's potentially great news for buyers who have been sitting on the sidelines because of one three-digit number.
💳 What's Actually Changing?
Traditionally, lenders have often required borrowers to meet a minimum credit score before moving forward with certain mortgage programs. But here's something most buyers don't realize: Not every credit score requirement comes directly from the loan program itself. Some are additional restrictions imposed by individual lenders. These are called lender overlays.
UWM has removed many of those overlays and is instead relying on the loan's automated underwriting system (AUS) to determine eligibility. Think of AUS as a tool that evaluates several pieces of your financial picture, not just your credit score. That includes things like income, debt, assets, credit history, and the specific loan program.
For loans covered by this change, an Approve/Eligible underwriting recommendation is required. That doesn't mean everyone qualifies. It means more borrowers may have an opportunity to be evaluated instead of being automatically turned away because of their score.
🔎 And Remember That VantageScore Change We Just Talked About?
This is where things get interesting!
In our previous Mortgage Minute, No Credit Score? You Still Have Options, I explained how the mortgage industry is expanding the ways it evaluates credit. One of those developments is the introduction of VantageScore 4.0 for eligible conventional mortgage loans. Unlike older scoring models, VantageScore 4.0 can consider additional credit information, including reported rental payment history and trends in how borrowers manage their credit over time.
For example, someone who consistently pays their bills but has a limited traditional credit history may benefit from a scoring model that captures more of their financial behavior. And UWM has made another change: it eliminated the 20-point adjustment it previously applied to VantageScore results for new locks beginning September 30, 2026.
Here's why these changes matter together:
VantageScore 4.0 provides another way to evaluate eligible borrowers' credit histories.
Removing minimum credit score overlays allows more borrowers to be considered through automated underwriting.
Non-traditional credit options may still help certain borrowers who don't have a conventional credit score at all.
These are three different tools, but they're moving the industry in a similar direction: looking more closely at the borrower rather than relying on one number.
And that's progress worth talking about!
🏠 What Does This Mean for Different Loan Programs?
Not every mortgage program follows the same rules, so let's break it down.
Conventional Loans
For eligible conventional loans that don't require mortgage insurance, UWM has removed its lender-imposed minimum credit score requirement. However, conventional loans requiring mortgage insurance still have minimum score restrictions. Under the program information I've received, that means a 620 minimum for those transactions. There are also exceptions for certain cash-out refinances, non-warrantable condos, down payment assistance programs, and specialized products.
FHA Loans
UWM has lowered its FHA minimum credit score to 500. FHA's standard down payment framework generally allows 3.5% down for scores of 580 or higher, while scores from 500 through 579 require at least 10% down. Automated underwriting approval and other applicable eligibility requirements still apply.
VA and USDA Loans
UWM has also removed its lender-imposed minimum credit score overlays for eligible VA and USDA loans. These programs still have income, credit, property, and other eligibility requirements. But removing an additional lender restriction could create new opportunities for qualifying veterans and rural homebuyers.
The takeaway? A lower score doesn't automatically mean a borrower should choose FHA, and a conventional loan isn't automatically off the table. The right program depends on the entire scenario.
💡 What If You Don't Have a Credit Score at All?
There's an important difference between having a low credit score and not having enough traditional credit history to generate one. Maybe you've always paid cash. Maybe you've avoided credit cards. Or maybe you have years of on-time rent and utility payments but very little credit activity.
Certain mortgage programs allow documented non-traditional credit to help establish creditworthiness. That can include payment histories for rent, utilities, insurance, and other recurring obligations. But having no score doesn't automatically produce an AUS approval, and non-traditional credit may require a different underwriting process.
I covered the details in No Credit Score? You Still Have Options.
💰 What About Your Down Payment?
Credit isn't the only thing that keeps buyers from exploring homeownership.
I hear this one all the time:
"Jenn, I need to save 20% before I can buy, right?"
Nope!
Depending on eligibility, some conventional programs offer down payments as low as 3%, FHA offers 3.5% for qualifying borrowers, and eligible VA and USDA buyers may have zero-down options.
Seller concessions may also help with allowable closing costs.
If saving for a home has been your biggest roadblock, check out my earlier article, Saving for a Home? Here's How to Buy Sooner Than You Think.
Because sometimes it's not about waiting until everything is perfect. It's about understanding what's possible and building a plan.
❓ Frequently Asked Questions
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Potentially, yes. Certain lenders now offer eligible loan programs without their previous minimum credit score restrictions. Qualification still depends on automated underwriting, loan program requirements, and your overall financial situation.
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No. VantageScore 4.0 is an additional scoring option for eligible conventional mortgages. Classic FICO remains available, and the model used depends on the lender and loan program.
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It can. Even when a lender removes a minimum score requirement, credit scores can still affect mortgage pricing, interest rates, mortgage insurance, and available loan options.
For more information, read my earlier article, Your Credit Score Isn't Perfect—But You Can Still Buy a Home.
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Not necessarily. Sometimes improving your score is the best strategy. Other times, you may already qualify under a program you haven't considered.
The important thing is understanding your options before making financial changes.
🐼 The Mortgage Mama Bear Takeaway
Here's what I want buyers and my real estate partners to remember: A credit score that got you turned down yesterday might not be the thing holding you back today. Between newer credit scoring models, expanded underwriting options, and lenders removing unnecessary restrictions, the mortgage industry is creating more opportunities for buyers who may have previously been overlooked.
Does that mean everyone qualifies? Of course not! But it does mean we need to stop assuming someone can't buy a home based on one three-digit number. Your credit score is important, but it's only one piece of your financial picture.
This is exactly why working with a mortgage broker makes a difference. With access to more than 50 lending partners, I can explore different programs, compare guidelines, and find opportunities that might not be available through a traditional bank or a single lender.
So, if you've been told your credit score is too low, or you're an agent with a buyer who was previously turned away, let's revisit that conversation! Guidelines change, opportunities evolve, and sometimes all it takes is a fresh look and the right game plan to get things moving.
DM me "CREDIT" and let's see what's possible!
Loan approval is subject to applicable underwriting, credit, income, asset, and property requirements. Lender-specific guidelines and program restrictions apply.
