Breaking News- How Rental History Can Help You Qualify
Mortgage Banker
Richard Blair
Published on August 16, 2021

Breaking News- How Rental History Can Help You Qualify

Starting September 18, 2021, the automated underwriting system used by Fannie Mae for conventional home loans (not for FHA, VA or USDA loans) will now count 12 months of positive rental payment history as a positive line of credit. Typically, your rental payment is not reported to a credit bureau by the landlord. Because rent payment history is not on your credit report any record of making timely payments for rent is not part of an automated underwriting decision.

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This can be great news for first time home buyers. What is a better indicator that you will make your mortgage payment on time then showing a history of timely rental payment? After all, by paying rent you are making the landlord’s mortgage payment!

The preliminary information suggests that Fannie Mae will count 12 months of positive rental history as a factor in favor of the prospective home buyer. To be eligible, borrowers must be a first-time homebuyer, pay a monthly rent of at least $300, purchase the house as their primary residence, and consent to sharing 12 months of their bank statement history. The rent history will only be used as a favorable factor. More details should become available as we get closer to September 18. The change should also help home buyers that have little other credit history, but always pay their rent on time. In fact, for most prospective home buyers, their monthly rent payment is their single largest recurring payment. It makes sense that home buyers get a benefit from paying their rent on time.

Bottom Line: The new underwriting innovation should result in a higher percentage of loan approvals for those home buyers that previously had insufficient credit history.

Verify my mortgage eligibility (May 20th, 2022)

Now is the time to contact the Richard Blair Lending Team to start your loan planning process and your mortgage pre-qualification. The smart home buyer is educated about the home buying journey and empowered to make great financial decisions. It is easy to get started with our fully automated pre-qualification process.

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