In a groundbreaking shift that could open the door to homeownership for millions of Americans, the Federal Housing Finance Agency (FHFA) has officially adopted VantageScore 4.0 for mortgage qualifications through Fannie Mae and Freddie Mac. This change has the potential to unlock $1 trillion in new mortgage activity and help up to five million new buyers qualify for a home loan—many of whom were previously shut out by older credit scoring systems.
So, what’s the big news for renters?
For the first time, on-time rent payments can directly boost your chances of getting a mortgage—especially if you’re a first-time buyer, young professional, veteran, or someone without a long credit history.
Why This Matters
Traditionally, mortgage lenders relied on older credit models like FICO, which often excluded people who didn’t have at least six months of credit history or recent borrowing activity. This outdated approach penalized responsible individuals who paid their bills—especially rent—on time, but didn’t rely on credit cards or loans.
VantageScore 4.0 changes the game by using alternative data like:
- Monthly rent payments
- Utility bills
- Cell phone payments
- Telecommunications history
That means if you’ve been consistently paying your rent and bills, you now have a better shot at qualifying for a mortgage—even without a deep credit file.
What This Means for Buyers
Whether you’re renting an apartment in the city or a home in a rural community, your rental history can now help paint a fuller—and fairer—picture of your financial responsibility. This is especially important for:
- Young adults just starting their financial journey
- Veterans and military families with minimal consumer debt
- Recent immigrants building U.S. credit
- Self-employed individuals with non-traditional income streams
And for current homeowners or investors selling to first-time buyers, this change dramatically expands the pool of qualified buyers.
How to Make the Most of It
If you’re a renter hoping to buy a home soon, here are some steps to take:
- Ensure your rent payments are reported to credit bureaus – Ask your landlord or property management company if they report to Equifax, Experian, or TransUnion. If not, consider using a third-party rent reporting service.
- Check your credit score – Request a credit report and look specifically at your VantageScore, which may be higher than your traditional FICO score if you’ve been making consistent rent and utility payments.
- Speak with a mortgage lender familiar with VantageScore 4.0 – Not all lenders are up to speed on the change. Make sure you’re working with one who understands how to evaluate your credit under the new model.
- Keep paying bills on time – Utility, phone, and internet bills all factor into your creditworthiness now.
A New Era in Homeownership
This shift is more than just a technical upgrade—it’s a major step toward financial inclusion. By recognizing rent as a legitimate form of credit-building, VantageScore 4.0 opens new doors for hardworking Americans who’ve been locked out of the traditional mortgage process.
With more ways to qualify and a more accurate picture of your financial habits, your path to homeownership just got a lot clearer.
The following is a table of the most common loan types and their requirements. Contact a credit union, mortgage broker, or lender for up to date information and the most options.
| Loan Type | Min Credit Score | Down Payment | Max DTI | Mortgage Insurance | Notes |
|---|---|---|---|---|---|
| Conventional | 620 | 3–20% | ~45% | Required <20% down | Private MI |
| FHA | 580 (or 500) | 3.5% (or 10%) | ~50% | Required (MIP) | Lenient credit |
| VA | ~580–620 | 0% | ~41% | None | Must be eligible veteran |
| USDA | ~640 | 0% | ~41% | Required | Income/location limits |
DTI stands for debt to income ratio. You can calculate your DTI by adding your monthly minimum debt payments and dividing the total by your monthly pretax income. Back-end DTI, the numbers that most lenders focus on, is based on your anticipated monthly housing-related expenses after your purchase, and all the minimum required monthly debt payments your lender finds on your credit report, including credit cards, student loans, auto loans and personal loans, all divided by your monthly pretax income.