Reader Question: FHA Loan Credit Requirements

June 13, 2012

A reader asks:

“The FHA approves people with poor credit. I see on the website that FHA is getting home loans, can you tell me what are your credit guide lines?”

FHA loan rules establish minimum credit requirements for loan approval, but borrowers should know that it’s a mistake to assume an FHA guaranteed mortgage is a “bad credit home loan” or similar products.

Banks that participate in the FHA loan program have their own credit requirements–they are not forced to issue home loans to borrowers that don’t meet the financial institution’s minimum credit score requirements for home loans even if the borrower technically meets the FHA minimum credit score cutoff.

That’s one reason why borrowers are encouraged to contact the FHA directly (1-800-CALL FHA) to learn about and arrange pre-purchase home loan counseling far in advance of seeking an FHA mortgage. With that said, here’s what the the FHA loan rules say on credit score minimums, as listed in FHA Mortgagee Letter 10-29:

By Joe Wallace

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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