source:
  type: guide
  id: fnma-sel-b3-5.4-01
  authority: Fannie Mae Selling Guide B3-5.4-01 — Eligibility Requirements for Loans
    with Nontraditional Credit
  description: Fannie Mae Selling Guide B3-5.4-01 — Eligibility Requirements for Loans
    with Nontraditional Credit.
  coverage_tier: operative
obligations:
- id: fnma-sel-b3-5.4-01-full
  canonical_id: fnma-sel-b3-5.4-01-full
  section: Fannie Mae Selling Guide B3-5.4-01 — Eligibility Requirements for Loans
    with Nontraditional Credit
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B3-5.4-01 — Eligibility Requirements for Loans
      with Nontraditional Credit
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'B3-5.4-01, Eligibility Requirements for Loans with Nontraditional
      Credit (11/05/2025) Introduction This topic contains information on nontraditional
      credit eligibility requirements, including: Overview Manual Underwriting DU
      Loan Caseﬁles Homeownership Education Overview If one or more borrowers do not
      have a credit score or have a limited traditional credit history, the lender
      must establish an acceptable nontraditional credit history. The lender must
      ﬁrst check all three major credit repositories to verify the borrower’s credit
      history. The credit report will indicate if a credit score could not be produced
      due to insuﬃcient credit. Lenders must ensure that the credit report accurately
      reﬂects the borrower’s information, such as the name, Social Security number,
      and current residence of the borrower to conﬁrm that the lack of traditional
      credit was not erroneously reported because incorrect information was used to
      order the credit report. Manual Underwriting If one or more borrowers on the
      loan does not have a credit score and is relying on nontraditional credit to
      qualify, the following requirements apply: The property must be a one-unit,
      principal residence. Published May 6, 2026 487 Non-occupant co-borrowers are
      permitted, provided the requirements described in B2-2-04, Guarantors, Co-Signers,
      or Non-Occupant Borrowers on the Subject Transaction, are met in addition to
      the eligibility requirements described herein. The transaction must be a purchase
      or limited cash-out reﬁnance. The loan amount must meet the baseline loan limits—high-balance
      mortgage loans are not eligible. The maximum debt-to-income ratio is 36%. There
      is no minimum reserve requirement if at least one borrower can document a housing
      payment history as one nontraditional credit reference. Otherwise, a minimum
      of 12 months reserves is required. See B3-5.4-02, Number and Types of Nontraditional
      Credit References, for additional information. A nontraditional credit history
      must be documented for each borrower without a credit score. See B3-5.4-03,
      Documentation and Assessment of a Nontraditional Credit History, for additional
      information. Unacceptable Uses The establishment of a nontraditional credit
      history is not acceptable for the following scenarios: The lender is able to
      obtain a credit score for the borrower despite the borrower’s limited use of
      credit. The borrower has a suﬃcient amount of credit to obtain a credit score
      and the representative credit score is less than the minimum required. Note:
      An exception is permitted for certain HomeReady loans for borrowers with low
      credit scores. See B5-6-02, HomeReady Mortgage Underwriting Methods and Requirements,
      for additional information. The borrower’s traditional credit history indicates
      signiﬁcant derogatory references, such as a prior bankruptcy or foreclosure.
      In these cases, the borrower must have re-established credit in accordance with
      B3-5.3-07, Signiﬁcant Derogatory Credit Events — Waiting Periods and Re-establishing
      Credit, including the establishment of traditional credit and a credit score.
      DU Loan Caseﬁles When at least one borrower has a minimum of one credit account
      or installment account reported on their credit report, DU will assess the risk
      using the borrower''s reported credit and the loan will be subject to standard
      eligibility guidelines. When no borrower has at least one credit account or
      installment account reported on their credit report, DU will apply the following
      requirements: The property must be a one- to four-unit, principal residence,
      and all borrowers must occupy the property. The transaction must be a purchase
      or limited cash-out reﬁnance. Reserves may be required as determined by DU.
      In both cases, no veriﬁcation of nontraditional credit references is required
      for any borrower when DU conducts a cash ﬂow assessment and issues a message
      that the third-party asset veriﬁcation report may be used to satisfy the requirements.
      Otherwise, a nontraditional credit history must be documented for each borrower
      as instructed by DU. See B3-5.4-03, Documentation and Assessment of a Nontraditional
      Credit History, for additional information. If a loan caseﬁle does not receive
      an Approve/Eligible recommendation, it may receive a more favorable Published
      May 6, 2026 488 recommendation if a 12-month asset veriﬁcation report is obtained
      (see B3-2-03, Risk Factors Evaluated by DU). In some cases the loan may still
      be eligible for manual underwriting. The lender must determine whether the loan
      meets the requirements for a manually underwritten loan that includes a borrower
      without a credit score. Homeownership Education See B2-2-06, Homeownership Education
      and Housing Counseling, for the requirements. Recent Related Announcements The
      table below provides references to recently issued Announcements that are related
      to this topic. Announcements Issue Date Announcement SEL-2025-09 November 05,
      2025 Announcement SEL-2025-02 April 02, 2025 Announcement SEL-2025-01 February
      05, 2025 Announcement SEL-2024-01 February 07, 2024 Announcement SEL-2023-01
      February 01, 2023'
  judgment: false
