August 2, 2013
A reader asks, “My credit score is 595 would I qualify to get an FHA loan?”
This question comes up quite often. Technically speaking, FHA standards for borrowers with FICO scores between 500 and 579 allow the lender to approve a loan for 90% of the maximum financing limit on that transaction–that means FHA standards would require a 10% down payment.
Borrowers with FICO scores below 500 are NOT eligible for FHA loans according to the FHA official site.
But one thing that’s very important to remember about FHA loan standards for FICO scores is that A) your credit scores are NOT the only criteria used for loan approval and B) the lender is free to require higher FICO standards.
Borrowers may be hard pressed to find a lender willing to approve a mortgage loan for borrowers applying for an FHA mortgage with FICO scores in the 500 range. Generally, FICO minimums at the time of this writing (in a very general sense) run between 620 and 640 for many lenders who issue FHA mortgages.
And again, it’s worth repeating–FICO scores are only part of the picture. If your repayment history has been good for the last 12 months, a FICO score at 640 may be at or near the lender’s minimum, but the repayment history makes a stronger case for or against loan approval.
Borrowers with credit scores below 620 should consider contacting the FHA for a referral to an FHA/HUD approved housing counselor in the borrower’s zip code who can help address credit issues and give advice on becoming a better credit risk. Contact the FHA directly for this help by calling 1-800 CALL FHA.
Do you have questions about FHA loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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