July 27, 2021
What is a good FHA loan credit score? In general, the obvious advice is that you should try to come to the home loan process with as high a FICO score as you can for best results.
But not everyone has the advantage of an Excellent credit rating. What do future homeowners need to know about FHA loan requirements and their credit score?
To start, you should know that no two lenders are exactly alike and it is a bad idea to assume you will get the same results from all of them.
Don’t assume you can’t qualify for a loan–have a loan officer help you determine what kind of mortgage is right for you.
FHA Credit Score Tip: Shop Around
Why do we say “shop around” when it comes to FICO scores and FHA loans?
Borrowers with FICO scores in the 580 zone or better need to understand that your chosen participating FHA lender may choose not to approve a home loan at the lowest end of this FICO score range without requiring a higher down payment. Lender standards apply, too. Not just FHA minimums.
So you will want to shop around for an FHA lender who is willing to work with your FICO score.
FHA Credit Score Tip: Think Like A Lender
What does your lender see when they open your credit report? If your job depends on interpreting what you see and deciding to approve a loan that could be a risk to the company, how strict will the lender be when looking at your credit history?
FICO score numbers aren’t the only thing used to approve a loan–credit history also counts. How many late payments have you had in the 12 months leading up to your loan application? If the answer is more than zero, you might not be ready for a mortgage loan just yet.
Have you missed any mortgage payments in the past? Or if you have been a renter, do your monthly rent and debt payments have a clean record with regard to paying on time?
FHA Home Loan Tip: Use Your Resources
When considering what to do about your credit score, remember that you can do a lot to repair your own credit. You can and should subscribe to a good, reputable credit monitoring service in order to protect yourself against nasty surprises on the way to home loan application time and beyond.
But you should also take advantage of other resources too, such as the FHA’s housing counselor referral option–you can be referred to a HUD-approved housing counselor in your area who can give you advice on financially preparing for a new home loan.
You can call the FHA at their direct line, 1-800 CALL FHA to get the referral.
Learn About the Path to Homeownership
Take the guesswork out of buying and owning a home. Once you know where you want to go, we’ll get you there in 9 steps.
Step 1: How Much Can You Afford?
Step 2: Know Your Homebuyer Rights
Step 3: Basic Mortgage Terminology
Step 4: Shopping for a Mortgage
Step 5: Shopping for Your Home
Step 6: Making an Offer to the Seller
Step 7: Getting a Home Inspection
Step 8: Homeowner’s Insurance
Step 9: What to Expect at Closing
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.
Browse by Date: