Minimum Credit Score Required For FHA Loans: 620 or 640?

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For many people who are searching for information about FHA loans, one of the key pieces of information they are looking for has to do with the minimum required mid credit score.  Many lenders are now at 640 and a few advertise 620 or maybe even a few even lower.

And if you are searching for the answer to the question “what is the minimum credit score required on an FHA loan?” the answer is:

The minimum required credit score for an FHA loan will vary by lender but most lenders are in the 620-640 range.

To confuse matters further, another little-known fact is that although many FHA lenders have different minimum credit score requirements, they change their requirements often.  Because of this, it is possible for you to ask a lender about their minimum credit score requirements for FHA loans this week and get an answer of “640” only to have the guidelines change next week and then they can do a minimum 620.

One recent example of a lender changing their minimum credit score guidelines from 640 to 620 came with “more information” about the change along with some more “requirements” that were associated with the easing down to 620:

Note – A few conditions that must be present for these loans include:

  1. Maximum PITIA may not exceed 33% of total qualifying income
  2. Maximum total monthly obligations including PITIA may not exceed 45% of total qualifying income
  3. Rescoring borrower to raise FICO to meet parameters is not acceptable and not allowed
  4. 2 months of reserves will be required covering 2 full months of PITIA for subject property
  5. Gift funds are not allowed for down payment, closing costs, prepaids, reserves or any other purpose (i.e. debt pay offs)
  6. Price hits for this FICO range will be administered and disclosed by Secondary on the rate sheet.
  7. Not eligible for Refinance transactions
  8. Not eligible for ARM’s
  9. Not eligible for non-occupant co-borrowers
  10. Not eligible for the FHA 203K loan programs
  11. Not eligible for flips that fall into the 0-90 day time frames

If you are in a situation where your current credit score is close to the minimum of what at least one lender requires, be sure to ask plenty of questions to your loan officer and know these things: first, guidelines are always changing and second, chances are that there are more guidelines than just a minimum score that you might need to worry about.

Justin McHood

Justin McHood is a Mortgage Commentator living in the Phoenix, Arizona area and is happy to answer any mortgage-related questions that you may have.
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Justin McHood is a Mortgage Commentator living in the Phoenix, Arizona area and is happy to answer any mortgage-related questions that you may have.

2 Comments

  1. This is a good article on FHA for borrowers with credit scores below 640. I work for PrimeLending, a mortgage company headquartered in Dallas. PrimeLending received an exception from investors which allows the company to offer FHA loans to borrowers with credit scores 620 above. However, your credit score is not the only requirement for qualification. I’ve noticed there is a poor presentation of the story from many people – realtors who tell qualified borrowers that they cannot get an FHA loan unless they have a 640. But also from lenders who falsely portray the ease of getting an FHA loan with credit scores of 620. What borrowers should realize is the program does exist for 620 and higher, but they must anticipate that additional requirements must be met before they close on their home.

    Point being, thanks for the article.

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