Fannie Mae Credit Requirements Part I

1. Types of Credit Report and Score

Credit Scores are required for MOST mortgage loans purchased or securitized by Fannie Mae. The classic FICO score is produced from software developed by Fair Isaac Corporation and is available from the three major credit repositories. Fannie Mae Requires the following versions of the classic FICO score for both DU and manually underwritten mortgage loans:

• Equifax Beacon® 5.0
• Experian®/Fair Isaac Risk Model V2SM
• TransUnion FICO® Risk Model, Classic 0

The lender must request these FICO credit scores for each borrower from each of the three major credit repositories when they order the three in-file merged credit report.

Note: The credit report will indicate if a credit score could not be produced due to insufficient credit. The credit report must be maintained in the mortgage loan file, whether the report includes traditional credit and a credit score or indicates that a credit score could not be produced due to insufficient credit.

2. Minimum Credit Score Requirements

Fannie Mae’s minimum credit score requirements are based on the representative credit score for the transaction and the highest of the LTV, CLTV or HCLTV ratios as applicable.

For Manually Underwritten Mortgage Loans

620 fixed rate loans

640 ARMs

DU Loan Casefiles

620 fixed rate loans and ARMs

Mortgage loans insured or guaranteed by a federal government agency (HUD, FHA, VA and RD)

620

Loans delivered pursuant to any variance contained in the lenders Master Agreement

Higher of 620 or the minimum credit score required by the variance

Exceptions to the Minimum Credit Score Requirement

Certain transaction are not subject to the minimum credit score requirements, including:

• Mortgage loans where no borrower has a credit score (see section B3-5.4, Nontraditional Credit History)
• Manually underwritten HomeREady mortgage loans that include a borrower with a low score (see B5-6-03, HomeReady Mortgage Underwriting Methods and Requirements (07/25/2017)
• DU Refi Plus and Refi Plus mortgage loans except for certain Refi Plus transaction that have a minimum credit score requirement (see Underwriting Requirements – Refi Plus in B5-5.2-02, DU Refi Plus and Refi Plus Underwriting Considerations (07/25/2017)

3. DU Credit Score Requirements

Credit scores are not an integral part of DU’s risk assessment because DU performs its own analysis of the credit report data. However, lenders must request credit score for each borrower from each of the three credit repositories when they order the three in-file merged credit report. If no or two of the credit repositories do not contain any credit information for the borrower who have traditional credit, the credit report is still acceptable as long as

• Credit data is available from one repository
• A credit score is obtained from that repository, and
• The lender requested a three in-file merged report

4. Representative Credit Score

1. Fannie Mae recommends obtaining at least two credit scores for each borrower
2. Select a single applicable score for underwriting each borrower
   1. When two credit scores are obtained, choose the lower score
   2. When three credit scores are obtained, choose the middle score
3. If there is only one borrower, the single applicable score used to underwrite that borrower is the representative credit score for the mortgage

If there are multiple borrower, determine the applicable credit score for each individual borrower and select the lowest applicable score from the group as the representative credit score for the mortgage. If there is a borrower on the loan who does not have a credit score, determine the representative credit score for the mortgage based on the credit scores of the other borrowers on the mortgage.

5. Foreign Credit Reports and Credit Scores

With the exception of the loan casefiles underwritten through DU, FAnnie mae permits the lender to use a credit report from a foreign country to document a borrower’s credit history. If a credit score is provided with the foreign credit report it cannot used to establish eligibility unless the credit score us the classic FICO. In addition, the lender must not deliver the foreign credit score to Fannie Mae and it cannot be relied upon to establish eligibility (unless the credit score is the classic FICO).