What is the Minimum Credit Score Needed for an FHA Home Mortgage Loan?

Find out what credit score you need to get an FHA mortgage

Credit scores determine whether or not home buyers can qualify for specific mortgage loan programs. The FHA mortgage program has a much lower credit score requirement than conventional loan programs available through Fannie Mae and Freddie Mac.

Do you need a Minimum Credit Score in order to get an FHA Home Mortgage Loan?

The FHA mortgage program does not officially have minimum credit scores. The final decision as to a minimum credit score for FHA loans is left up to the mortgage lenders who make these loans using the FHA program. Home buyers can find three types of FHA mortgage lenders offering loans today:

1. Minimum 640 Credit Score Lenders. Most mortgage lenders now require a minimum 640 credit score along with an automated underwriting approval from the FHA underwriting system in order to qualify for an FHA purchase loan. (Total Mortgage is one of these lenders.) If you have a credit score above 640 but below 700 then this is your only option. If you have a credit score above 700 and are making a down payment of less than 20%, you may qualify for a conventional Fannie Mae/Freddie Mac loan but the monthly private mortgage insurance costs will be much higher than through the FHA program.
2. Minimum 600 Credit Score Lenders. There are a select few FHA mortgage lenders who will approve FHA loans where borrowers have a credit score of 600 or higher. However, borrowers must be squeaky clean to qualify for these loans and also must have an automated underwriting approval as well. Borrowers with a credit score between 600 and 640 are advised to work closely with their loan officer to help get their loan approved.
3. Minimum 500 Credit Score Lenders. Home buyers who have credit scores below 600 may still have an opportunity to buy a home by finding one of the few FHA mortgage lenders who manual underwrite their loans. But home buyers beware: not only are these loans more expensive than standard FHA loans (you will probably get a rate about one half to on full percentage point higher), getting approved is not that easy. The FHA program is not the sub-prime loan program of several years ago. And even though lower credit scores are accepted, that does not mean that bad credit is acceptable. For example, a borrower with a poor credit history who has paid their debts and is looking for a fresh start is a candidate for this type of FHA loan. A borrower who has multiple outstanding unpaid charge-offs is less likely to get an approval.

Credit score requirements for the FHA program were not lowered by lenders. Instead, Fannie Mae and Freddie Mac along with private mortgage insurance companies increased their minimum credit score requirements for home purchase loans with down payments of less than 20%. For many low down payment options, the mortgage insurance companies have just canceled writing coverage completely.

If your credit score is below 600, your best bet is to try to address the credit issues that are dragging you down before trying to buy a home. Also, if there are errors bringing down your credit score, you can work with a reputable credit repair company to fix these problems. The cost of credit repair has come down dramatically with newer technology, and the turnaround time to fix credit items has decreased from months years ago to a couple weeks today.

For a free mortgage pre-approval and exact rate quote for your FHA mortgage loan, please email us or call us at 1-877-868-2503.

To see the current mortgage rates, visit our Current Mortgage Rates page.

If you have any questions that you would like to get answered by our expert mortgage brokers, please email us or call us at 1-877-868-2503.

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