Renters May Now Have An Easier Time Qualifying for a Mortgage

By Kimia Amos

It’s about to get easier for renters with limited credit history to qualify for a conventional loan. Beginning September 18, 2021, Fannie Mae will have a new feature in its automated underwriting system that will incorporate rent payments with the permission of the loan applicant. Single-family lenders will be able to automatically identify a pattern of recurring rent payments in an applicant’s bank statement during the underwriting process.

This is huge news for responsible renters with a short credit history. The fact that timely rent payments will count toward mortgage eligibility is a good thing, but the sole act of paying your landlord on time won’t guarantee that you’ll be able to borrow money to buy a home when you want to. To qualify, borrowers will need to:

Be a first-time homebuyer, which means you haven’t owned a home for the past three years.
Meet Fannie Mae requirements, which includes a FICO score of at least 620 for fixed-rate mortgages; an acceptable down payment (at least 3%, depending on the loan product); and sufficient debt-to-income ratio.
Make 12 months of rent payments that can be identified in the payment history of a bank account. Only a positive history of payments - not missed or late ones - will be considered.

Work on these steps to boost your chances of qualifying for a mortgage. If you’d like to learn more, give me a call. I have the resources you need to succeed in your homebuying goals!