How Does FHFA Use FICO Scores From Fair Isaac?

FHFA translates every borrower's FICO score into a risk bucket that drives GSE eligibility: scores 620 or higher meet the baseline for conventional loans, 660 and above qualify for the lowest capital charges, and any score below 620 is automatically excluded from GSE purchase. The agency also caps the share of GSE‑owned loans with scores under 660 (at roughly 30 percent) to preserve overall portfolio credit quality.

To enforce those buckets, FHFA continuously monitors the GSEs' loan‑level data, compares the score distribution to its thresholds, and can order corrective actions if limits are breached. As of Q4 2023, FHFA requires both Fannie Mae and Freddie Mac to use the latest FICO 10T model and to apply the same score‑to‑bucket mapping across all new mortgages, a practice detailed in the FHFA underwriting guidance.

FHFA accepts specific FICO Score models for GSE‑eligible loans, and each model has a known start date. As of 2024 the agency allows versions 04, 05, 06, 08, 09, 10 and 10T; earlier versions are no longer used for new underwriting. For the exact rollout see the FHFA FICO model acceptance schedule.

The FHFA converts a borrower's FICO score into a three‑tier eligibility ladder that determines whether a loan can be sold or guaranteed by the GSEs.

•  As of 2024, FHFA requires a minimum FICO score of 620 for any conventional loan to be eligible for purchase or guarantee by Fannie Mae or Freddie Mac.
•  Scores 660 and above generally satisfy the 'standard eligibility' bucket, allowing borrowers to use the full range of GSE loan products with the lowest fees.
•  Scores between 620 and 659 place a loan in the 'restricted eligibility' tier; the GSEs will still buy or guarantee the loan but impose tighter underwriting limits, higher fees, or require additional cash reserves.
•  FICO scores below 620 render a loan 'ineligible' for GSE acquisition, meaning lenders must either retain the loan in their own portfolio or seek a non‑GSE investor.
•  FHFA also ties the 'best‑rate' pricing tier to scores 740 and higher, which unlocks the most favorable interest‑rate caps and reduced mortgage‑insurance premiums.
•  All eligibility determinations must use the most recent FICO version accepted by the FHFA (currently FICO 10 and 11) and must come from one of the three major credit bureaus, as outlined in the FHFA policy statement on credit scoring.
•  The FHFA mandates that the same FICO score be used for both the primary borrower and any co‑borrower when evaluating joint‑applicant loans, ensuring consistent eligibility across the application.

GSEs translate the FHFA‑mandated FICO risk buckets into concrete pricing adjustments on every loan they guarantee.

• FHFA publishes a Risk‑Based Pricing (RBP) table that maps FICO score ranges to 'risk buckets' (e.g., 720‑850 = low, 660‑719 = moderate, 620‑659 = high).
• Each bucket carries a base guarantee fee and a minimum yield spread that the GSE must charge; these numbers are fixed in the FHFA rulebook as of 2024.
• When a loan's borrower FICO lands in a higher‑risk bucket, the GSE adds a credit‑risk premium to the base fee - typically 0.2‑0.4 percentage points for each step down the table.
• The premium is reflected in the 'GSE‑adjusted rate' the lender offers the borrower; lenders cannot lower the rate below the FHFA‑set floor, nor can they charge above the GSE‑imposed ceiling.
• Example (2024 FHFA RBP):
  • 720‑850 → base fee 0.60 % + 0 % premium
  • 660‑719 → base fee 0.60 % + 0.20 % premium (total 0.80 %)
  • 620‑659 → base fee 0.60 % + 0.40 % premium (total 1.00 %)
• GSEs also apply 'price‐adjustment caps' that prevent fees from exceeding the FHFA maximum (currently 1.05 % for Fannie Mae and 1.10 % for Freddie Mac).

These pricing rules let the GSEs internalize credit risk while staying within FHFA's guardrails, directly shaping the interest rate you see on a conforming mortgage.

Next, we'll see how FHFA's pricing framework ripples into the borrower's final mortgage rate.

FHFA directly shapes your mortgage rate by mandating the FICO‑score bands that GSEs must use when pricing loans. As of 2024, the agency groups FICO scores into tiers - 760 and above, 720‑759, 680‑719, and 620‑679 - and tells Fannie Mae and Freddie Mac to apply a preset spread to their base rate for each tier. The higher your FICO score, the smaller the spread, so the quoted rate drops.

Because GSEs cannot deviate from those spreads, lenders inherit the FHFA‑defined risk premium. Your final interest rate equals the lender's base rate plus the FHFA‑assigned spread for your FICO score tier. This mechanism links credit quality to pricing, and it explains why a modest score difference can shift your rate by several‑tenths of a percent. The next section will show why the FICO score you see on your credit report may not match the score underwriters use.

Your consumer‑facing FICO score often comes from an older public model (commonly FICO 8 or VantageScore) and is delivered by credit‑monitoring services that refresh weekly or monthly, not daily, so it may not include your most recent credit activity.

When a lender underwrites, they pull the exact FICO version required for the loan at the moment you apply. For GSE‑backed conventional loans FHFA mandates FICO 4 (as of 2024) FHFA model requirements, while FHA and VA programs follow HUD/VA guidelines that generally require FICO 5. The underwriter's score reflects the current data window defined by the lender's policy, not a fixed 30‑day‑old snapshot.

The co‑borrower's FICO score can raise the combined borrower profile above FHFA's minimum, while a cosigner's score only helps the underwriter's risk assessment and may improve the offered rate.

FHFA‑guided GSE rules evaluate a secondary applicant as follows:

• if at least one borrower meets the GSE‑specific floor (generally 620 for Fannie Mae, 580 for Freddie Mac as of 2024), the loan can qualify even if the primary score is lower;
• the secondary score is averaged with the primary when calculating the 'combined‑borrower' score that drives eligibility and pricing tiers;
• a cosigner's score does not count toward the eligibility floor, but a strong cosigner can persuade the underwriter to approve a borderline application and can lower the margin applied by the GSE.

Because the co‑borrower's score directly influences both approval and pricing, borrowers should prioritize adding a partner with a solid credit history. The next section explains how FHFA treats nontraditional or no‑FICO credit profiles when a co‑borrower's score is unavailable.

FHFA accepts alternative‑credit models for borrowers who lack a traditional FICO score, but it still requires those models to produce a proxy score that meets the same minimum cut‑off (generally 620 as of 2024) used for conventional GSE‑eligible loans.

• A borrower whose only credit comes from on‑time rent and utility payments receives an alternative‑credit score of 640; the loan clears FHFA's 620 threshold and the GSEs can purchase.
  
• A borrower with a thin file and no tradelines gets a proxy score of 590; the loan falls below the FHFA floor and is ineligible for GSE purchase.
  
• A primary borrower with no FICO but a strong cash‑flow gets a non‑FICO score of 630 after the lender applies an FHFA‑approved model; the loan qualifies despite the lack of a traditional score.
  
• A borrower with no credit history but a co‑signer rated 720 FICO still needs a primary‑borrower proxy score of at least 620; a 610 proxy score leads to GSE ineligibility.
  

For policy details see the FHFA guidance on alternative credit scoring.

Here are five real borrower examples that show how FHFA's FICO rules affect loan eligibility, pricing, and underwriting.

• Borrower A - 620 FICO - As of January 2024, FHFA sets a 620‑point floor for GSE‑backed conventional loans. Borrower A meets the floor, so the GSE‑approved lender approves the loan and applies the lowest discount‑point pricing tier, saving roughly 0.125 percentage points versus a 610‑point borrower. FHFA's FICO floor policy explains this tiered pricing.
• Borrower B - 580 FICO - FHFA's floor bars GSEs from purchasing a loan with a score below 620. Borrower B's 580 score triggers an automatic denial for a Freddie Mac or Fannie Mae loan, forcing the borrower to seek an FHA loan or a private lender with higher rates. The denial occurs before any underwriting discretion.
• Borrower C - 700 FICO - FHFA treats all scores above 620 the same for baseline pricing. Borrower C's 700 score qualifies for the same minimum rate as a 640‑score borrower because the GSEs apply a risk‑based pricing floor, not a linear discount. The borrower still benefits from a lower rate than sub‑620 applicants, but the premium difference between 640 and 700 is minimal.
• Borrower D - Primary 640 FICO, Co‑borrower 590 FICO - FHFA bases eligibility on the primary borrower's score. Borrower D's 640 meets the floor, so the loan proceeds. The co‑borrower's 590 score influences the lender's internal risk assessment and may add a small pricing surcharge, but it does not breach FHFA's floor requirement.
• Borrower E - 720 FICO with non‑traditional credit - FHFA allows GSEs to accept alternative data when a traditional FICO score is unavailable, but once a score exists, the 620 floor still applies. Borrower E's high score and supplemental rent‑payment data secure the best pricing tier, demonstrating that FHFA's rules complement, rather than replace, alternative credit models.

A real case shows a borrower using a FICO score pie chart to spot a single weakness, fix it, and lift the score within weeks.

The pie chart breaks the score into Payment History 35%, Amounts Owed 30%, Length of Credit History 15%, New Credit 10%, and Credit Mix 10%, letting users see which slice drags the overall number (Poor <580, Fair 580‑669, Good 670‑739, Very Good 740‑799, Exceptional 800+).

Example: Sarah (28, Fair 620) ran a free online tool that generated her FICO score pie chart. The Amounts Owed slice occupied 45% of the chart, far above its 30% target, while Payment History sat at a healthy 30% of its 35% share. She paid $2,500 toward two revolving credit cards, reducing utilization from 78% to 42%.

One month later the pie chart recalibrated: Amounts Owed dropped to 32%, overall score rose to 682 (Good), and a lender approved her auto loan at a 4.9% APR. The visual cue from the pie chart guided the quick credit fix without guessing which factor to target.

FHFA typically revises its FICO policies after a new FICO version is released and publishes the changes in a Federal Register notice that takes effect on the first day of the following month, usually within 12‑18 months of the score's launch.

Watch the FHFA website for the next 'FICO policy update' and compare the announced score cut‑offs to the ones you're currently meeting; if the new threshold is higher, improve your credit now rather than waiting for a loan application.

Run a fresh credit report, run a 'what‑if' scenario using the updated cut‑offs, and tell your lender you're following the latest FHFA rules before you apply - this prepares you for the next section on six fast ways to boost your loan chances.