Summary
New changes will allow Generation Z to qualify for home loans without meeting the previous minimum credit score requirement of 620. Lenders will now evaluate broader financial behaviors and history rather than just credit scores, making it easier for some young people to buy homes.
Key Facts
- The minimum credit score requirement of 620 for home buyers is being removed.
- This change aims to help young people, especially those in Generation Z, who have limited credit history.
- Instead of focusing solely on credit scores, lenders will consider income stability, debt levels, and rent payment history.
- This may allow more Generation Z buyers to qualify for mortgages, even if their credit scores are low.
- Responsible borrowers with a short credit history stand to benefit, though financial education is crucial for understanding the costs of homeownership.
- The average U.S. home is valued at about $360,727.
- Lenders may adjust prices or tighten rules due to the increased risk of lower credit score loans.
- Experts do not expect a large increase in newly-qualified borrowers from this rule change.
