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Credit Score Requirements for FHA Loans

FHA loans offer flexible credit and down payment options for buyers, making it an ideal choice for buyers with less-than-perfect credit.

FHA home loans are government-backed mortgages insured by the Federal Housing Administration. These mortgage loans are sometimes easier to get than conventional home loans due to their less stringent credit requirements and lower down payment requirements. FHA loans are a great option for first-time home buyers and those with low-to-moderate incomes, but anyone can apply. You can use these loans for the purchase of a primary residence.


How Credit Affects Your Home Buying Options

Your credit history directly impacts whether you’re approved for an FHA mortgage. It also determines your mortgage interest rate. Borrowers with low credit scores and more recent credit problems have a higher risk of default. So they typically pay higher mortgage rates, which increases the cost of their loan. A higher rate means paying more in interest over the life of the loan, as well as a higher monthly payment.


Standard Credit Score Needed for Home Loan


Average 20-year-old's Credit Score


Some Lenders Approve Loans at This Score


Official HUD Guidelines for Credit Score

According to the U.S. Department of Housing and Urban Development (HUD), borrowers must have a credit score of 580 or higher to get an FHA loan with a 3.5% minimum down payment. Borrowers with credit scores between 500 and 579 and get approved with a down payment of 10%. Those with credit scores 499 or lower are not eligible for an FHA loan.

The purchase price of a property determines the down payment. Mortgage insurance is required when a borrower puts down less than 20%. FHA borrowers who put down less than 10% pay mortgage insurance for the life of the loan.

Average FICO Scores Among Borrowers

Credit scores range from 300 to 850. Average credit scores vary depending on age group and the length of a person’s credit history. According to the credit reporting company Experian, consumers over the age of 60 have an average good credit score of 749. Those between the ages of 20 and 29 have an average score of 662.

Minimum Credit Score for All Loan Types

Minimum credit score requirements vary by loan type. The average for a mortgage loan is around 620 to 640. Personal loans, however, typically require higher credit scores, between 680 and 700. The minimum score for a car loan varies by lender. Some lenders do not have minimum credit requirements, but they’ll charge higher rates when a borrower has no credit score or a low credit score.

FHA Loans with No Credit

If you haven’t established credit yet, FHA lenders will sometimes allow the use of non-traditional credit to qualify for a mortgage. This includes a good payment record for utility payments, rental payments and auto insurance payments. Applicants must also have sufficient income to qualify for an FHA home loan. Lenders require copies of tax returns, W2s, paycheck checks and bank account statements.

Credit Score Needed for FHA Loan Approval in 2020

The minimum credit score for an FHA loan varies by mortgage lender. Even though applicants with scores as low as 500 can get approved with a bad credit score, some lenders will only approve applicants who have a minimum score of 580.

Getting an FHA Mortgage After a Bankruptcy, Foreclosure or Short Sale

It is easier to get approved for an FHA home loan after credit problems, compared to other loan programs. You might qualify for a loan two years after bankruptcy, three years after a foreclosure, and three years after a short sale.

See If You Qualify

FHA Lenders Look at More Than Just Your Credit Score

Keep in mind that lenders look at more than your credit score when approving an FHA mortgage application. They’ll also evaluate your employment record, income history, and your assets. Your income must be stable and consistent, and you must have sufficient cash reserves to cover your down payment and closing costs.

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