Gen Z now has one less worry when it comes to buying a home—their credit score, or lack of one, won’t be the dealbreaker it once was.
This weekend, the long-standing minimum credit score requirement of 620 for borrowers will be scrapped. The shake-up comes as homeownership gaps between generations continue to widen. In 2024, just 23 percent of Americans under 25 owned a home, compared to 80.9 percent of people in their early 70s, according to Statista.
Those born between 1997 and 2012 are already navigating high prices and stricter lending standards, the relaxed credit rule may create a new, if still narrow, path to getting on the property ladder, according to real estate adviser Leo Pond.
He told Newsweek that lenders will now focus less on a single credit score and more on a buyer’s overall financial behavior.
“This opens the door for buyers with thinner credit files, limited history, and past dings that would have disqualified them outright,” he said. “More people will qualify for mortgages, but their ability to pay them off and make timely payments may lead to higher defaults.”
A Barrier Removed—But Not the Hard Parts
Pond, who works for Four Seasons Sotheby’s International Realty, said lifting the minimum score removes “an artificial barrier that may disqualify younger people that have been making mortgage priced rental payments on time for the past few years.”
But he added that lenders won’t be relaxing overall standards. According to Pond, lenders will now need to scrutinize a borrower’s debt levels, financial reserves and payment consistency—especially when credit scores are low.
“Gen Z buyers will now get past the first hurtle into the conservation,” he said, noting that a buyer’s broader financial picture will ultimately decide whether they get approved and what loan terms they receive.
Pond sees the shift as a benefit for responsible buyers who simply lack a long credit history. But he emphasized that it makes financial education and long-term planning even more important so first-time homeowners fully understand the true costs of owning a home.
According to Zillow, the average U.S. home is valued at $360,727, and with apartment utilities already averaging around $150 a month, homeowners can expect those costs to run even higher in a house.
Newsweek also spoke with Realtor.com senior economist Jake Krimmel, who said the change may help a small group of otherwise qualified borrowers with sub-620 scores—particularly younger buyers with thin credit histories. But he is not expecting “an an avalanche of newly-qualified borrowers.”
How Will This Help Gen Z Buyers?
Pond said underwriting systems will now rely more heavily on income stability, debt-to-income ratios, cash-flow patterns, rent payment history and overall consumer behavior. Consistent on-time housing payments, he noted, may matter more than revolving credit performance.
“This will help Gen Z buyers especially those with limited credit histories or who avoid credit cards altogether,” he explained.
“Many Gen Z buyers pay rent reliability, at a rental rate compared to the cost of a small mortgage depending what rental market their in. This shift in requirements will allow underwriters to focus on a consumer’s previous rental payment history, rather than their credit worthiness. This will allow many more borrowers to qualify for a mortgage when they wouldn’t have been able to before.”
Pond said lenders may respond to added risk through small price adjustments or tighter internal rules.
He said: “Lenders will offset the increased risk on these loans through minor pricing variations or tighter overlays. I don’t expect a widespread rate increase for individual lenders on these loans, but risk based situational adjustments for individual borrowers are still highly likely.”
Kimmel said: “I do not expect removing the 620 minimum to move the market. In practice, this subsidizes demand but would likely only bring in a small number of newly-qualified borrowers (such borrowers would probably pay higher interest rates because of their credit score).
“The share of subprime borrowers has shrunk significantly since the mid 2010s, while lending standards have become much more stringent. Under current financial conditions, this won’t raise systemic risk. But depending on the borrower and the loan terms they receive, subprime loans might not be a good deal at the individual level.”
Pond told Newsweek that the update reflects where the mortgage industry is heading.
He said: “This shift in guidelines aligns with the industry’s growing focus on cash flow underwriting, rental payment history, and nontraditional credit markers. Its a move toward evaluating how people manage money day to day, which is particularly relevant for Gen Z’s financial habits since many of them are able to pay rent on time, but don’t have a strong credit history.”
