By Kerry Smith
Renters with thin credit histories may still qualify for a home loan under a Fannie Mae program that allows lenders to consider consistent, on-time rental payments when making lending decisions. Neither buyers nor lenders pay extra to use the new tool.
WASHINGTON – The Federal Housing Finance Agency (FHFA) announced on Tuesday that Fannie Mae will consider rental payment history in risk assessment processes. The change should help renters with thin credit scores – usually a limited credit history because they may not use credit cards or charge purchases – qualify for a home mortgage.
If future borrowers have a strong rental payment history, Fannie Mae will allow its lenders to consider that history in their underwriting decision. There is no additional burden – either for the borrower or for the lender – to use this feature.
“For many households, rent is the single largest monthly expense. There is absolutely no reason timely payment of monthly housing expenses shouldn’t be included in underwriting calculations,” says Fannie Mae Acting Director Sandra L. Thompson.
“With this update, Fannie Mae is taking another step toward understanding how rental payments can more broadly be included in a credit assessment, providing an additional opportunity for renters to achieve the dream of sustainable homeownership,” she adds.
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