January 2, 2014
We’ve gotten several questions about FHA loan credit score requirements lately. Here are two of them. One reader asks, “I am a veteran…and in the past I have a lot of credit issues…I have cleared up most of them, but I am a federal employee who because of credit scores, rent year to year…what is the minimum credit score to qualify for FHA home loans…I am so tired of moving all the time….I know for a VA home loan it is now 640, a lot of help there…”
Another reader asks, “My credit score is 615. My score has came up alot in the last year and a half. I own a single wide trailer with my ex husband. No one will refinance this single and I am wanting to trade it in on a new mobile home so I can be done with my ex and he is free of me. Is it possible to get a FHA loan with this credit score?”
FHA loan minimums start at a baseline required by the FHA (500 or above) but these are only the minimums required by the FHA program. The lender is free to require a higher minimum FICO score and often does. You may find that a 640 credit score requirement is typical, though some lenders may be willing to work with lower credit scores depending on the borrower and the circumstances involved.
The FHA cannot force a lender to offer credit to applicants that don’t meet that financial institution’s minimum credit requirements. These requirements can vary from lender to lender, so it’s best to shop around for an FHA loan to find the best terms and conditions available to you.
Borrowers who have credit scores considered “marginal” should consider contacting the FHA directly to request a referral to an FHA/HUD approved housing counselor who can help with FHA loan preparation including credit advice. Any FHA loan applicant who can’t come to the application process with at least 12 months of on-time bill payments is strongly encouraged to contact the FHA for such a referral (by calling 1-800 CALL FHA) for advice on how to proceed.
Remember, FHA loan regulations establish minimum guidelines for creditworthiness, but the lender’s “overlays” also play a part in the decision making process. Your experience will vary depending on the lender. In the case of the second reader question, the nature of the loan may also play a part–some lenders may be unwilling to refinance mobile homes depending on the circumstances. Borrowers should take the “shop around” advice to heart when trying to refinance in these circumstances–shopping around for a lender willing to work with you is important in this area, too.
Do you have questions about FHA home loans? Ask us in the comments section. You can apply or get pre-approved for an FHA loan at FHA.com, a private company and not a government website.
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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