Credit Score Overview
HomeReady requires a minimum 620 middle credit score for loans with one borrower. For loans with multiple borrowers, Fannie Mae averages each borrower's middle score to test for the 620 minimum. Fannie Mae does not use the lower borrower's middle score for HomeReady.
HomeReady loans do not have loan-level price adjustments (LLPAs) for credit score or loan-to-value ratio. Relative to other conventional mortgage programs, therefore, HomeReady is more affordable to home buyers and homeowners with average or below-average credit scores.
📊 Key Statistic
Minimum Credit Score Requirement
HomeReady's minimum credit score requirement is 620 . Fannie Mae selects a mortgage applicant's credit score using a system:
- If you have three credit scores, the middle score is used
- If you have two scores, the lower score is used
- If you have one score, that score is used
For loans with multiple borrowers, Fannie Mae uses the average of the two middle scores.
Borrowers with no credit score may still qualify by documenting a nontraditional credit history, such as consistent on-time payment of rent and utilities. However, this is less common and not offered by all lenders.
Your credit score works alongside the HomeReady Income Limits to determine eligibility. Even with an excellent score, your income must still be within the program's 80% AMI cap.
HomeReady Credit Score Quick Reference
| Scenario | Which Score Is Used? |
|---|---|
| One borrower, three scores | Middle score |
| One borrower, two scores | Lower score |
| One borrower, one score | That score |
| Multiple borrowers | Average of each borrower's middle score |
| No credit score | Nontraditional credit history |
How Credit Scores Affect HomeReady Pricing
Standard conventional loans apply loan-level pricing adjustments (LLPAs) to change borrower mortgage rates based on their credit score and down payment percentage. HomeReady mortgages don't do this. Regardless of your credit score or LTV, if you are eligible for HomeReady, you get the same interest rate whether your credit score is 620 or 850.
The "no-LLPA" system makes HomeReady particularly attractive for borrowers with lower credit scores
Here is a table that shows the effects of HomeReady's credit score policy on mortgage pricing. Generally, one percentage point of cost equals +0.25 to a mortgage rate.
HomeReady LLPA Comparison
| Credit Score | Standard Loan | HomeReady Mortgage |
|---|---|---|
| ≥ 780 | 0.125% | 0.00% |
| 760 – 779 | 0.250% | 0.00% |
| 740 – 759 | 0.500% | 0.00% |
| 720 – 739 | 0.750% | 0.00% |
| 700 – 719 | 0.875% | 0.00% |
| 680 – 699 | 1.125% | 0.00% |
| 660 – 679 | 1.250% | 0.00% |
| 640 – 659 | 1.500% | 0.00% |
| 620 – 639 | 1.750% | 0.00% |
How Credit Scores Affect HomeReady PMI Mortgage Insurance
HomeReady does not add loan-level price adjustments (LLPAs) based on credit score or down payment. However, HomeReady does require borrowers to pay private mortgage insurance (PMI).
Thankfully, PMI on HomeReady loans is less expensive compared to comparable standard conventional loan. As an example, a buyer purchasing a single-family home Ohio with a 30-year fixed rate HomeReady mortgage and with a 620 credit score will pay 0.56% less per year for PMI compared to a buyer using a standard conventional loan.
And, like other conventional loans, HomeReady PMI can be canceled once your home reaches 20% equity.
For more information about HomeReady PMI, read our HomeReady PMI Guide.
Key Takeaway
HomeReady requires a minimum credit score of 620 . For loans with multiple borrowers, Fannie Mae uses the average of each borrower's median score. HomeReady waives LLPAs, so Fannie Mae doesn't add pricing hits for lower scores. Private mortgage insurance still varies by credit score and LTV.
Frequently Asked Questions About HomeReady Credit Scores
Find answers to common questions about the credit score requirements for the HomeReady mortgage program.
What is the minimum credit score for HomeReady?
620. For multiple borrowers, Fannie Mae uses the average of each borrower median score.
Can I qualify without a credit score?
In limited cases with documented nontraditional credit and manual underwriting. Not all lenders offer this.
Does a higher score lower my rate?
HomeReady waives Fannie Mae LLPAs tied to credit score and LTV. However, private mortgage insurance premiums still vary by credit score and LTV, and lender pricing can differ.
Do income limits still apply if I have a high score?
Yes. The 80% AMI limit applies regardless of credit score.
Can I use a co-borrower to help with credit score eligibility?
Possibly. DU averages each borrower median score to test the 620 minimum, so a co-borrower with a higher score can help meet eligibility.
