Most buyers never hear the words “manual underwriting,” and that is usually a good sign. But if you have a thin credit file, a recent career change, or a financial picture that does not fit neatly into an automated approval, it can be the path to a mortgage. On Nov. 4, 2026, Fannie Mae published new manual underwriting requirements that take effect in February 2027. Here is what changed, in plain English, and what it means if you are planning to buy in Hampstead, Rocky Point, Burgaw, Surf City or anywhere around the Cape Fear.
First, What Is Manual Underwriting?
Most Fannie Mae loans are evaluated through its automated underwriting system, Desktop Underwriter. When a file is instead underwritten by a person following Fannie Mae’s published eligibility matrix, that is manual underwriting. It tends to come up for borrowers with limited credit history, unusual income documentation, or other situations the automated system cannot approve on its own. Manual files are held to specific minimum credit scores, debt-to-income (DTI) limits and cash reserve requirements.
What Fannie Mae Announced
In Lender Letter LL-2026-09, dated Nov. 4, 2026, Fannie Mae said it is revising the manual underwriting rules in its Eligibility Matrix. The changes apply to loans delivered to Fannie Mae on or after Feb. 22, 2027. According to the letter and Fannie Mae’s announcement page, the key changes are:
- Aligning minimum credit scores for fixed-rate and adjustable-rate loans.
- Setting consistent credit score and reserve requirements for two- to four-unit principal residences and for cash-out refinances.
- Combining all manual underwriting requirements, including HomeReady and HomeStyle Renovation, into a single matrix.
The letter also states that, for manually underwritten loans, credit score references include both Classic FICO and VantageScore 4.0, with the same minimums for both.
The New Numbers for a Typical Home Purchase
For a one-unit principal residence purchase or limited cash-out refinance, the revised matrix in the lender letter allows up to 95 percent loan-to-value on fixed or adjustable loans, with these minimums:
- DTI up to 36 percent: 680 minimum credit score (620 if LTV is 75 percent or less), with no reserves required.
- DTI up to 45 percent: 720 minimum credit score (680 if LTV is 75 percent or less), with no reserves required.
For two-unit purchases (up to 85 percent LTV) and three- to four-unit purchases (up to 75 percent LTV), the matrix calls for a 660 score with six months of reserves at DTI up to 36 percent, or 680 with six months at DTI up to 45 percent.
For cash-out refinances, one-unit homes are capped at 80 percent LTV and need a 680 score with no reserves at DTI up to 36 percent, or 720 with six months of reserves up to 45 percent. Two- to four-unit cash-outs are capped at 75 percent LTV and need 680 or 720 with 12 months of reserves.
Fannie Mae notes that HomeReady and HomeStyle Renovation loans remain eligible for manual underwriting only for purchases and limited cash-out refinances.
What It Means for Cape Fear Buyers
The bar is clear: score and DTI work together. If your file ends up being manually underwritten, keeping your DTI at or below 36 percent can mean a meaningfully lower score requirement than stretching to 45 percent. That is useful planning information for first-time buyers looking at starter homes in Rocky Point or Burgaw, where a slightly lower price can keep DTI in the lower tier.
VantageScore counts the same. Because the letter treats VantageScore 4.0 and Classic FICO the same for manual files, ask your lender which model they are pulling. Separately, HUD’s Mortgagee Letter 2026-11 says FHA will accept FICO 10T and VantageScore 4.0 alongside Classic FICO for case numbers assigned on or after Jan. 1, 2027, with existing FHA minimums unchanged.
Small multifamily investors, take note. If you are eyeing a duplex near Hampstead or Wilmington to live in one side, the six-month reserve requirement for manually underwritten two-unit loans is something to plan cash around.
Timing. The changes apply based on when the loan is delivered to Fannie Mae, not when you go under contract. If you are closing in early 2027, ask your lender which rules they will apply to your file.
Other Paths Worth Comparing
Manual underwriting under Fannie Mae is only one option. Depending on where and what you buy, an FHA, VA or USDA loan may fit better. Our guides on FHA loans for first-time buyers, USDA loans in Pender County and down payment help in the Wilmington area are good next reads.
FAQ: Fannie Mae’s Manual Underwriting Changes
When do the new rules take effect?
For loans delivered to Fannie Mae on or after Feb. 22, 2027.
Does this change automated approvals through Desktop Underwriter?
The lender letter addresses manually underwritten loans and the manual section of the Eligibility Matrix.
Can I use a VantageScore 4.0 score?
For manual underwriting, the letter says credit score references include both Classic FICO and VantageScore 4.0, with the same minimums.
How do I know if my loan will be manually underwritten?
Your loan officer can tell you after reviewing your application. Ask early, so you have time to adjust DTI or reserves if needed.
Plan Your Purchase With Local Help
Getting the financing right starts with knowing what you can comfortably afford in the neighborhoods you love. Reach out to Aspyre Collective and we will connect the numbers to real homes in Pender, New Hanover and Brunswick counties.
