As a renter, it’s common practice for your rental payment history to be excluded from your credit report—meaning your monthly housing payment isn’t factored into your credit score. This could put you at disadvantage when you’re ready to buy a home, especially if you have a limited credit history.
The good news? Lenders who underwrite conventional loans based on Fannie Mae guidelines are now able to consider positive rental payment history when reviewing a homebuyer’s credit profile.
Evaluating your rental history
Fannie Mae’s underwriting system now allows lenders to identify recurring rent payments on a mortgage applicant’s bank statements (with their permission, of course). Only consistent rent payments made electronically or by check are considered; missing or inconsistent payments won’t impact an applicant’s chances of qualifying for a home loan.
To take advantage of this underwriting feature, at least one borrower must:
- Make rent payments of at least $300 per month
- Have been renting for at least one year
- Have bank statements that show the most recent 12 months of recurring rent payments
- Have a minimum 620 credit score
- Be a first-time homebuyer purchasing a primary residence
Gathering positive rental payment history data can help demonstrate a homebuyer’s creditworthiness and ability to handle their housing costs, since it’s likely the largest monthly obligation they’ll manage before taking out a mortgage.
Talk to one of our loan officers to figure out if you can take advantage of this first-time homebuyer incentive.