March 30, 2015
A reader asks, “My husband recently contacted quicken loans which do fha loans, they pulled his credit and said he was short one point with a score of 619? If you guys are showing you can do loans with scores in the 500s. Why would he of been denied?”
One thing potential FHA borrowers should remember about FICO score requirements on FHA home loans is that FHA minimums are just that–the minimum requirement. An individual lender as mentioned in the reader question is free to require a higher FICO score in order to get a loan with that financial institution as long as that higher requirement is applied in accordance with federal laws.
It’s true that the FHA loan rules printed in HUD 4155.1 state that a borrower with a FICO score of 580 or higher is technically eligible for maximum FHA loan financing, which requires a 3.5% minimum down payment from the borrower.
But FHA loan FICO score standards at the lender mentioned in the reader question, or from any lender, may and often are be higher than that minimum 580 score. You may find lenders are looking for a minimum 620 FICO score or higher, in some cases 640 or even 680 depending. So key to the answer to this reader question is remembering that every lender has different standards.
That is why we continually emphasize the need to shop around for a lender–you may find some lenders willing to work with you and your circumstances where other lenders are not willing. A borrower with a “borderline” FICO score may be approved for an FHA loan if he or she has substantial contributing factors such as a large down payment, cash reserves, investments or other things that can work in the borrower’s favor.
Do you have questions about FHA home loans? Ask us in the comments section. All comments are held for review.
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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