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Borrower qualification for a 3.5% down payment mortgage requires a minimum FICO® score of 580. However, approved lenders may have stricter requirements.

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FHA Credit Requirements

FHA Credit Requirements

One of the main things many first-time homebuyers worry about then shopping for a mortgage, is whether their credit score is high enough. It's a source of stress for Americans looking to get a loan. Your credit score impacts the type of mortgage you'll qualify for, what interest rate you get. When it comes to the FHA, it also determines how big of a down payment you'll have to make.

Credit Scores Needed for FHA Loan Qualification

The FHA has famously low credit score requirements; that's what makes them so appealing. You need a credit score of at least 500 to be considered eligible for an FHA loan, but this doesn't qualify for the FHA's most affordable down payment options.

Your credit score is directly tied to your down payment requirement. Borrowers with a credit score of 580 and higher can qualify for the FHA's lowest down payment requirement of 3.5%, whereas those with scores between 500 and 579 must pay 10% of the loan amount.

In terms of actual dollars, with a 520-credit score, you'd need to pay $25,000 (10%) as a down payment on a $250,000 home. But with a credit score of 610, you would be paying $8,750 (3.5%).

Your credit score will also impact the interest rate on the mortgage. A higher interest rate shows lenders that you are less of a risk, which will likely get your a lower interest rate and make you eligible for adjustable-rate mortgages or loans with shorter terms.

Know Your Credit Score

It's important for potential homebuyers to do their homework. So if you're getting ready to buy a home, make sure you check your credit score. You might have a high enough score to where you don’t have to worry about being approved. If not, there are ways you can work at improving it:

  • Pull your credit report and review it. Check to see if there are any errors and if so, dispute them.
  • Make sure you are paying your bills on time, every time. Set up automatic online payments where you can so you never miss a due date. Missed or late payments can stay on your record for years.
  • If you don’t have an established credit history, start building one. Set up utility bill payments online through a credit card account in your name to help establish credit.
About the One-Time Close Constuction Loan
To qualify for an FHA loan with a 3.5% down payment, the FHA requires a credit score of at least 580. A 500 FICO® score will qualify you with a 10% down payment.
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FHA Loan Articles

Getting Approved for an FHA Loan

While an FHA home loan is a good option for first-time homebuyers who don’t have enough money saved for a large down payment, it’s important to understand the ins and outs of the FHA guidelines, and what it takes to get approved as a borrower. 

Things to Know About Making an FHA Loan Down Payment

Many first-time homebuyers need some help understanding and navigating the ins and outs of the mortgage process, and down payments are an essential part of that. A down payment is an upfront installment made on a large purchase while the remainder is paid off with a loan.

Buying a Home in 2021 - It's a Seller's Market

No matter what kind of market you’re in, it is always best to get pre-approved before going to shop for houses. The last thing you want is to go look at homes, find the one you love, then have to wait on an approval and lose the dream home to another buyer.

What Your Credit Score Says About You

Credit scores tend to be a source of anxiety for many Americans, because they realize the weight they hold when it comes to getting a loan for nearly anything. Taking the mystery out of this 3-digit number goes a long way to helping people understand and increasing their score.

Planning and Saving for a New Home

There are tons of reasons why people decide that they’re done with renting and start looking into buying a home. Whatever your reason, deciding to buy a home is a big step, and one of the most daunting aspects is saving up enough money for the down payment.

How to Get Credit-Ready for a Mortgage

The FHA helps first-time and low-income homebuyers by having lower down payment requirements for its borrowers. Despite this lower credit eligibility criteria set by FHA, it is important to remember that FHA-approved lenders can set their own requirements

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