U.S. Mortgage Underwriting to Adopt New Credit Score Models

The U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA) have announced that new credit score models will be implemented for mortgage underwriting. This marks the first update to the credit scoring models used for mortgages in decades and is part of implementing the Credit Score Competition Act of 2018.

Key Changes for Lenders and Borrowers

• The Federal Housing Administration (FHA) will now allow the use of VantageScore 4.0 and FICO 10T for FHA-insured mortgage underwriting.
• Fannie Mae and Freddie Mac, the government-sponsored enterprises regulated by FHFA, are also adopting VantageScore 4.0 and FICO Score 10T.
• Fannie Mae and Freddie Mac have updated their selling guides and are now accepting loans scored with VantageScore 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."

HUD Secretary Scott Turner stated the announcement was in service to a presidential promise.

Official Statements on the Modernization Effort

FHFA Director William J. Pulte emphasized the practical impact of the change:

"We are modernizing credit scoring with more predictive models, helping millions of Americans who responsibly pay rent qualify for mortgages."

He attributed the action to presidential leadership.

Broader Context

The FHFA regulates Fannie Mae, Freddie Mac, and the 11 Federal Home Loan Banks. Together, these entities provide over $8.5 trillion in funding for the U.S. mortgage markets and financial institutions. The shift to newer, more predictive credit models is expected to influence this vast segment of the housing finance system.