FHA Credit Requirements and FICO Scores
August 27, 2023
While the FHA has set the minimum credit score at 500, most lenders that offer FHA loans typically require a minimum FICO score of 580 or higher to qualify for the 3.5% down payment option. Borrowers with FICO scores below 580 may still be eligible for an FHA loan, but may need to come up with a 10% down payment to get the loan.
Lenders will also review your credit history as an indicator of your past financial responsibility. A history of late payments, collections, or delinquencies can have a negative affect on your ability to qualify for an FHA loan. Generally, they'll probably be looking at the last two years of your credit history.
They'll also pull your credit report from the three major credit bureaus (Equifax, Experian, and TransUnion) to evaluate your credit history. It's important to review your credit report for accuracy and dispute any errors before applying for an FHA loan.
FHA guidelines typically require borrowers to have a maximum debt-to-income ratio of 43%. This means that your total monthly debts, including your mortgage payment, should not exceed 43% of your gross monthly income.
Your mortgage provider may also consider your employment history, income stability, and overall financial stability when evaluating your creditworthiness. Try not to make big changes right before you apply for a home loan.
If you've had a bankruptcy or foreclosure in your financial history, there are waiting periods before you can qualify for an FHA loan. The waiting period varies based on the circumstances and the type of loan.
If you have a lower credit score or do not meet the FHA credit requirements on your own, you may be able to apply with a co-borrower who has a stronger credit profile.
Since FHA loan requirements can change over time and lenders may tighten their own requirements during tough economic times, it's crucial to consult with an FHA-approved lender or visit the official FHA website for the most current information.
------------------------------
RELATED VIDEOS:
Keep Your Eyes on Your Loan Balance
Learn About FHA Loan Prepayments
Taking Out a Home Loan Makes You a Borrower
FHA Loan Articles
February 27, 2025 Buying your first home can feel overwhelming, especially when you start hearing terms like "subprime mortgages" and "FHA loans." Understanding these options is crucial for making the right decision. Subprime mortgages are designed for borrowers with less-than-perfect credit histories. This might include past issues like late payments, loan defaults, or even bankruptcy...
February 26, 2025Buying your first home can be exciting, but the mortgage process often throws a curveball of unfamiliar terms. Here are answers to common questions first-time homebuyers have about mortgage jargon and terms.
February 18, 2025Mortgages typically require mortgage insurance and homeowners insurance. They are both key parts of your home loan but they serve very different functions. Do you know the differences between the two? Find out how ready you are to begin the process of buying your new house.
February 17, 2025The federal government backs FHA home loans, which allows participating FHA lenders to offer lower down payment options and more lenient credit requirements. How much do you really know about your FHA home loan options and how they compare to other mortgage choices?
February 13, 2025For many college graduates, student loan debt is a concern. A common question is how this debt impacts the ability to buy a home. This Q&A explores the relationship between student loans and FHA loan approvals. How much do you know about how your student loan debt affects your ability to be approved for a mortgage?
