UWM Drops Its Minimum Credit Score Overlay on Agency Loans
UWM said Oct. 7 that conventional, FHA, VA and USDA eligibility will be set by automated underwriting rather than a company score floor. Scores still drive pricing, and Jumbo, Bank Statement and Investor Flex minimums remain.
By Anthony Brikho · 3 min read
Why this matters: Some borrowers with lower scores were turned away by a lender's own rule, not by the agency's underwriting. UWM says it is removing that extra rule on agency loans. A lower score can still cost more.
Cover: a credit score gauge beside an underwriting checklist. Illustration created for mortgage.news; it does not depict a real person, property or document.
What UWM announced
United Wholesale Mortgage said on Wednesday, October 7, that it is removing its minimum credit score overlay on agency products, effective immediately. An overlay is a lender requirement stricter than the agency's own guideline.
The change covers loans sold to Fannie Mae and Freddie Mac and loans in Ginnie Mae securities, which UWM listed as FHA, VA and USDA. UWM said eligibility will be determined by the Automated Underwriting System, or AUS, the agency tools that weigh a borrower's whole file.
What did not change
- Scores still affect pricing. UWM said they "will continue to be used for pricing purposes, such as agency LLPAs," according to the release.
- Minimum scores remain for UWM's Jumbo, Bank Statement and Investor Flex loans.
- The agencies' own guidelines and AUS findings still apply. A file the AUS does not approve is not made eligible by this change.
How it differs from Tuesday's news
On October 6, UWM said it would pull both FICO and VantageScore 4.0 and use the better eligible result. That concerned which score is used. Wednesday's change concerns whether a score floor blocks the loan at all. UWM linked the two, saying scores "can vary materially between models."
CEO Mat Ishbia said in the release that UWM found credit scores "are not the strongest predictor of a borrower's ability to qualify." UWM did not publish that analysis.
Who this affects
UWM lends through independent mortgage brokers, so borrowers reach it through a broker. The change matters most to borrowers near a score cutoff whose income, assets and debt otherwise support approval.
The takeaway
- If a lender declined you over a score minimum, ask whether the denial came from an overlay or from the AUS.
- Ask for pricing at your actual score. Eligibility and cost are separate questions.
- Get a Loan Estimate before comparing offers.