The U.S. mortgage landscape is undergoing a major shift as Fannie Mae and Freddie Mac will now allow lenders to use VantageScore 4.0, offering borrowers an alternative to the dominant FICO model. This change, announced by Federal Housing Finance Agency Director Bill Pulte, is expected to broaden access to home loans, particularly for underrepresented borrowers.<\/p>\n\n\n\n
Fannie and Freddie currently back about 70% of the U.S. mortgage market. Until now, they relied exclusively on FICO scores to determine borrower eligibility and pricing. The addition of VantageScore is intended to lower closing costs, introduce competition in the credit scoring space, and recognize additional data points like rent and utility payments.<\/p>\n\n\n\n
VantageScore, developed by the three major credit bureaus in 2006, operates on the same 300-850 scale as FICO but uses different methods to assess creditworthiness. Its latest model, 4.0, incorporates non-traditional credit data, helping more Americans \u2014 especially those with limited or no traditional credit \u2014 qualify for a mortgage.<\/p>\n\n\n\n
Pulte emphasized the significance of the move, writing: \u201cCredit history will no longer just include credit cards and loans. This is HUGE.\u201d Mortgage experts estimate the change could impact up to 5 million potential borrowers, offering a path to homeownership that had previously been out of reach.<\/p>\n\n\n\n
Rick Roque of NFM Lending noted that many in Black, Latino, and immigrant communities remain \u201cunderbanked\u201d and disproportionately rent. Including rental history in credit evaluations helps bridge that gap and open the door to homeownership.<\/p>\n\n\n\n
Beyond expanding eligibility, the move could also pressure credit report prices to come down. The cost of mortgage credit reports has soared in recent years \u2014 now often exceeding $140 and in some cases nearing $300. Since most of these fees are passed on to borrowers at closing, introducing competition could provide financial relief.<\/p>\n\n\n\n
The Consumer Financial Protection Bureau has flagged credit report inflation as part of a broader investigation into so-called \u201cjunk fees.\u201d The FHFA has now indicated it will incentivize lenders to use both scoring models by offering more favorable loan pricing when both are applied.<\/p>\n\n\n\n
Despite the change, qualifying for a mortgage will still require a solid income, sufficient assets, and meeting the agencies\u2019 underwriting standards. Borrowers will also need to work with lenders who adopt the VantageScore model. But mortgage professionals say the new option could move some applicants from FHA loans into better-priced conventional mortgages, depending on how their scores compare across the two systems.<\/p>\n\n\n\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
Fannie and Freddie to accept VantageScore 4.0 alongside FICO The U.S. mortgage landscape is undergoing a major shift as Fannie Mae and Freddie Mac will now allow lenders to use VantageScore 4.0, offering borrowers an alternative to the dominant FICO model. This change, announced by Federal Housing Finance Agency Director Bill Pulte, is expected to […]<\/p>\n","protected":false},"author":10772,"featured_media":12325,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[2022,2024,2018,2025,2021,2027,2020,2023,2019,2026],"class_list":{"0":"post-12324","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-world","8":"tag-bill-pulte","9":"tag-credit-report-costs","10":"tag-fannie-mae","11":"tag-fico","12":"tag-freddie-mac","13":"tag-home-loan-access","14":"tag-mortgage-credit-score","16":"tag-underbanked-borrowers","17":"tag-vantagescore-4-0"},"_links":{"self":[{"href":"https:\/\/globalgazette.us\/index.php?rest_route=\/wp\/v2\/posts\/12324","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/globalgazette.us\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/globalgazette.us\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/globalgazette.us\/index.php?rest_route=\/wp\/v2\/users\/10772"}],"replies":[{"embeddable":true,"href":"https:\/\/globalgazette.us\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12324"}],"version-history":[{"count":1,"href":"https:\/\/globalgazette.us\/index.php?rest_route=\/wp\/v2\/posts\/12324\/revisions"}],"predecessor-version":[{"id":12326,"href":"https:\/\/globalgazette.us\/index.php?rest_route=\/wp\/v2\/posts\/12324\/revisions\/12326"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/globalgazette.us\/index.php?rest_route=\/wp\/v2\/media\/12325"}],"wp:attachment":[{"href":"https:\/\/globalgazette.us\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12324"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/globalgazette.us\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12324"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/globalgazette.us\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12324"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}