June 4, 2015
One common theme we find when fielding some questions about FHA home loans involves FICO score requirements. It’s true that FHA mortgage loan FICO score minimums are often lower than the requirements of some participating FHA lenders, but some borrowers get confused about FHA loan FICO score requirements in general–never mind what minimum number the FHA might accept versus what the lender might accept.
One variation on a commonly asked FHA loan question goes something like this: “Does your actual FICO score matter as much as the details of your credit report? It sounds like the number on your FICO score isn’t that crucial compared to your credit history in the last 12 months leading up to the loan.”
The idea that your FICO score itself “doesn’t count” as much as the other details of your credit report is not accurate. Lenders pay attention to both your actual FICO score number as well as your loan repayment history and your other financial qualifications.
FHA home loan minimum FICO scores are there for a reason–borrowers with scores under 500 can’t qualify for an FHA loan at all; those with scores between 500 and 580 can’t get maximum FHA financing for a loan and must pay a higher down payment. But your lender may have higher scores in mind–between 620 and 640 minimum depending on the lender and the circumstances. Don’t assume that just because one aspect of your credit report is strong that it can compensate for a lower FICO score–that’s not necessarily true.
Borrowers who are worried about FICO scores and related issues should contact the FHA at 1-800 CALL FHA, and request a referral to a HUD-approved housing counselor who can help with advice on how to be as prepared as you can be for an FHA loan application.
Don’t wait until the last minute to schedule this counseling, though–borrowers do well to get it at least a year ahead of time so they can better prepare credit, repayment history and other requirements in advance of the loan paperwork.
Do you have questions about FHA loans? Ask us in the comments section. All comments must be reviewed before they can appear on the site and your comment may not appear right away.
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: