Applications & Technology

Create more homeownership opportunities for borrowers without credit scores

Coming to Desktop Underwriter Dec. 10, 2022

We believe consumers should benefit from their responsible money management habits and a steady stream of income when buying a home, even if they don’t have an established credit history. With upcoming enhancements in Desktop Underwriter® (DU®), consumers who apply for home loans where no borrower has a credit score will be better positioned to access credit, and lenders will benefit from a simplified underwriting process too.

This is another step in our commitment to drive positive change and create a more equitable and sustainable homebuying process. 

Here’s how we’re doing it

Updating the eligibility criteria for loans where no borrower has a credit score to align with Fannie Mae’s standard Selling Guide requirements, which may help more borrowers qualify for a home loan.

Now permitted:

  1. One- to four-unit properties (including manufactured homes) up to standard LTV, CLTV, and HCLTV ratios, and
  2. Up to the standard maximum allowable debt-to-income ratio of 50%.
  • Data is gathered through a third-party asset verification report containing 12 months of data.
  • DU will assess or consider a borrower’s cash flow by reviewing transaction patterns, balance trends and other observations over time in their checking and savings accounts and investment accounts.

When an asset verification report is used by DU in the analysis of loans where no borrower has a credit score, the report may be used to satisfy the nontraditional credit source documentation requirements per the Selling Guide.

Why this is important

Millions of people in the U.S. are credit invisible, with Black and Latino/Hispanic people disproportionately represented. Close to 15% of Black and Latino/Hispanic people are credit invisible – compared to 9% of their white and Asian counterparts, according to the Consumer Financial Protection Bureau (CFPB).

Another reason to use asset data

Increase lending opportunities

  • Leverage cash flow to help borrowers without credit scores qualify for a loan
  • Use consistent rent payment history to qualify more first-time homebuyers (for borrowers with a credit score)
  • Obtain asset validation for borrowers through the DU validation service

Gain efficiencies 

  • Reduce paperwork, save time
  • May satisfy requirements for nontraditional credit source documentation

Take advantage in 3 easy steps

After you have ordered a credit report and verified that the borrower(s) on the loan application do not have a credit score, follow the steps below to enable DU to conduct a cash flow assessment:

  1. Educate the borrower about the asset verification process, how it works, and obtain the appropriate borrower consent to order a report.
  2. Order a report with 12-months of asset data from an authorized verification report supplier. Enter the Reference ID in DU.
  3. Review the DU Underwriting Findings messages to see if the bank statement data has been considered.

Have questions?

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