For years, mortgage lenders have mostly used FICO scores when reviewing a buyer’s credit. But that is starting to change with the new VantageScore mortgage updates.
Fannie Mae, Freddie Mac, and FHA have all started moving toward allowing VantageScores in mortgage underwriting. That may sound like a small technical change, but for some buyers, it could make a real difference.
Why VantageScore Matters for Homebuyers
Many buyers already know their VantageScore without realizing it.
If someone checks their credit through Credit Karma, a credit card app, or another free credit monitoring tool, there is a good chance they are seeing a VantageScore instead of the traditional FICO score lenders have used for years.
That has created a lot of confusion.
A buyer might think their score is 677, but when a lender pulls mortgage credit, the FICO score may come back at 621. Not exactly the fun kind of surprise.
With the new VantageScore mortgage updates, that gap may start to matter less in some situations.
What We Are Seeing So Far
We are already seeing VantageScores come in higher than traditional FICO scores in some cases.
Sometimes the difference is around 30 points. Sometimes it is even more.
Here are a few examples we have seen:
A buyer with a 573 FICO score showed a 665 VantageScore.
Another buyer around 670 on FHA moved into the 720 range with VantageScore, which opened up potential conventional loan options.
That kind of credit score difference can change the conversation.
How a Higher VantageScore May Help
A higher score does not guarantee loan approval. Mortgage approval still depends on income, debt, assets, credit history, property type, and the full loan file.
But in the right situation, a higher VantageScore may help a buyer:
- Qualify when they previously could not
- Move from FHA to conventional
- Get a better interest rate
- Lower mortgage insurance
- Access a stronger loan program
For buyers who have been sitting on the sidelines because of credit, this may be worth another look.
This Is Not Magic, But It Is Helpful
The VantageScore mortgage update does not mean every buyer suddenly qualifies.
It also does not mean every loan program, lender, or scenario will use VantageScore the same way right away.
But it does mean some buyers who were previously told “not yet” may have more options than they realized.
And that is a pretty big deal.
Should You Check Again?
If you checked your credit, got discouraged, or were told your score was too low to buy a home, it may be time to revisit the numbers.
Your situation may look different under the new VantageScore mortgage guidelines.
The best first step is a full loan review so we can see what your actual options look like.
Final Thoughts
Credit scoring in mortgage lending is changing.
For some homebuyers, VantageScore may help create a path forward that was not available before.
If you are thinking about buying a home, or if you were previously told your credit score was holding you back, reach out to Houzd Mortgage.
It may be worth taking another look.