First-time homebuyers can use positive rental payment history to qualify for FHA-issued mortgages

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October, 2022

In some good news, late last month, the Federal Housing Administration (FHA) announced that it will allow first-time homebuyers to use positive rental payment history in their credit assessment to see if they are eligible for an FHA mortgage product. Positive rental payment history includes rental payments made on-time during the last twelve months. Adding this rental payment history criteria would allow first-time homebuyers who lack or have a lower credit score greater access to homeownership.

NAHREP has long advocated for including rental payment history in credit assessments since communities of color, on average, utilize less credit and therefore have lower credit scores. In 2019, former NAHREP National President Joseph Nery testified in front of Congress and advocated for utilizing alternative credit models in mortgage underwriting. Latino households, specifically, are more likely to lack a credit score than their non-Latino counterparts. Many Latino households rely more on cash than credit to pay for expenses, making the ability to demonstrate creditworthiness using traditional credit scoring models more difficult. Although millions of Latinos pay rent, utilities, and cell phone bills with cash, in full and on time, these factors have not historically contributed to their credit score.

This announcement from FHA will be a big deal for many Latino families. As you know from our State of Hispanic Homeownership Report, Latinos are nearly twice as likely as the general population to use FHA products when purchasing a home. By allowing positive rental history to be used in determining creditworthiness, the dream of homeownership will be more accessible to many in our community.

Visit the U.S. Department of Housing and Urban Developments Mortgagee letter here for more information on specific program requirements or to provide public feedback.

About NAHREP’s National Advocacy Committee

The National Association of Hispanic Real Estate Professionals® (NAHREP®) advocates on behalf of its network of 50,000 real estate professionals and Hispanic homeowners nationwide. NAHREP focuses on national and state legislative issues that are critical to its mission: to advance sustainable Hispanic homeownership.

NAHREP firmly believes every individual who desires to become a homeowner and can sustain a mortgage should be granted access to a piece of the American Dream. To that end, we are focused on three main priorities: Housing Inventory, Access to Credit, and Immigration. Visit our website to read more about NAHREP’s policy priorities and to get involved.