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Two moves announced by Federal Housing Finance Agency officials Monday could give a boost to first-time buyers, , minority buyers and others with less resources who’ve been unceremoniously shoved out of the housing market by rising prices and interest rates this year.

First, the FHFA announced it is satisfied with the safety of two new credit score models used by government-owned mortgage securitizers Fannie Mae and Freddie Mac. Called FICO 10T and VantageScore 4.0, the models are used to rate borrower’s credit-worthiness and will replace the 20-year-old model known as “Classic FICO” over a “multiyear” period, the FHFA said. The biggest difference between the old and new models, the FHFA said, is that they incorporate payment histories for things like rent, utilities and cellphone payments – often a predictor of how good someone is at paying their bills on time, and something that most people pay, even if they don’t have a credit card or a credit history.

The move was directed by a law passed by Congress in May 2018 and will also be paired with a reduction in the number of credit-reporting agencies from three to two that a mortgage lender will have to pull reports from when trying to sell a loan to Fannie or Freddie.

“Today’s decision will benefit borrowers and the Enterprises, along with maintaining safety and soundness,” FHFA Director Sandra L. Thompson said in a statement. “While implementing the newer credit score models is a significant change that will take time and require close coordination across the industry, the models bring improved accuracy and a more inclusive approach to evaluating borrowers.”

In tandem with the credit scoring change, the FHFA announced it’s also eliminating fees that lower- and middle-income first-time homebuyers will have to pay when taking out several types of mortgage loans:

• First-time homebuyers at or below 100 percent of area median income in most of the United States and below 120 percent of area median income in high-cost areas
• HomeReady and Home Possible loans (Fannie Mae and Freddie Mac’s flagship affordable mortgage programs)
• HFA Advantage and HFA Preferred loans
• Single-family loans supporting the Duty to Serve program.

The changes will be paid for in part by increasing fees charged to cash-out refinance borrowers.

Since fees on mortgage products cannot be financed, the move effectively drops the amount 1 in 5 borrowers will have to save up along with their down payment, the FHFA said, citing statistics covering loans most recently bought by Fannie and Freddie.

The mortgage industry’s biggest trade group applauded both moves, saying they would improve low- and moderate income buyers’ access to mortgages, meaning first-time and minority buyers will particularly benefit.

“The announced updates on credit scoring models should help broaden the scope of eligible borrowers and expand access to homeownership for underserved communities. MBA supports competition in the credit scoring space, and we will work with FHFA to ensure costs and the implementation process are monitored to mitigate unintended consequences to lenders and borrowers,” Mortgage Bankers Association President and CEO Bob Broeksmit said in a statement.