Historically, some renters have struggled to qualify for their first mortgage loan because of an insufficient credit history. Unlike homeowners who have an established mortgage payment history on their credit report, renters do not have this benefit working in their favor. As of September 21, 2021, however, this will change. On this date, Fannie Mae will begin using a new feature in its Desktop Underwriting system that gives renters proper credit for making timely rental payments.

Specifically, the new feature will scan an applicant’s bank statements to obtain an accurate payment history for rental payments. Fannie Mae estimates that this feature may have helped up to 20 percent of those who have been denied a mortgage during a studied period to qualify for a new home loan. Previously, an applicant’s rental history may have been considered, but it was not an automated process. The rental history must have been researched and input manually, and it required the landlord’s cooperation. By automating the process, Fannie Mae is improving the likelihood that an applicant’s full credit history is taken into account.

Some applicants may worry that their inconsistent or missing payments may negatively impact their ability to qualify for a mortgage. Rest assured that this change to Fannie Mae’s underwriting guidelines has no negative impact on a person’s ability to qualify. Missing or inconsistent payment history that is extracted from the applicant’s bank statements will be ignored by the software program.

Do you want to learn more about your ability to qualify for your first home mortgage? Contact the MortgageDepot team today to get prequalified.

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