I hung up the phone with someone yesterday who asked me a few questions about FHA credit score requirements. The answers I gave to the questions she asked were just strange enough that I thought it might be helpful to share with others – because they may have these same questions.
Question: Does FHA require that people have minimum credit score requirements?
Answer: No, but investors do. And because investors all have different credit score requirements, you will find that they won’t lend you money unless you meet their minimum credit score requirements.
What has essentially happened over the last year or so is that there has become a “normal” credit score requirement by many investors of 620 – meaning your middle credit score must be 620 to be able to get the investor to lend you money that can be insured by FHA.
But not all lenders require a 620. Some require a 580. Some require a 500. Some have no credit score requirements at all.
It all varies by investor, and each loan officer generally works with many different investor, no matter what company they work with.
If you called me today, and asked me “if I work with you as my loan officer, what is the minimum credit score that I will need?” Here is the answer I would give today:
If you are refinancing your current FHA loan, I have an investor that doesn’t require a minimum credit score for the FHA streamline refinance.
If you are purchasing a house using an FHA loan, all of the investors that I work with currently require that you have at least a 620 middle credit score.
And of course, that all can change – as in maybe even 2 minutes after I hit “publish” on this post.
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Regardless of whether you could get approved on a loan at such a low credit score, I can’t quite see how a person in that category could afford a loan payment. It would see to me that they shouldn’t have the necessary cash position to put a down payment either.
@Lee,
Thanks for stopping by and leaving a comment. I know this may amaze you… but I see it all the time. Someone with high (enough) income and bad credit. And no money saved for a down payment.
And yes, it scares me.
But guidelines are tighter now than they were two years ago – which is a good start.
Justin
Hello Justin,
Your article was good. What I am looking for, probably like many other people, is the name of a reputable FHA lender or lenders who do not have minimum credit score requirements!! Or, can you provide a list of investors who do not have such requirements? Your help would be greatly appreciated.
Sincerely,
Nick Simoneau
Lee H. you are naive and a fool. I am a 583 right now and I am having issues getting a loan even though I have a house paid off in cash worth 350k. And I have 500k liquid cash in the bank. My issue is that I have little debt. So there is no good debt to offset by one bill of bad debt. I had a bill overdue I had forgotten about for only 3,900$. And I may have been late paying my car payment due to illness twice. That reamed my credit to 583, but with my assets I am a better risk than the average fool with a higher score. This is why the mathematical reasoning of the fico score makes no sense. And why investors are fools to exclude people like me. I’ve paid off that deliquent bill, maybe I will goto 620 sometime. I hope so I want to buy a new house before selling this one I am relocating for a job and I cannot afford to pay all cash since I have 350k cash in this house. I need a loan and I cant get one. America has gone stupid. That’s why they loan to people with no assets and leave ppl with assets and one delinquent bill aside.
I am very annoyed with Lee & Justin’s comments. Just because you HAD bad credit does not mean things can’t change. For example, if someone had a high debt to income ratio but then was promoted to a position with a salary that doubles and could afford to handle a higher payment on an FHA 203k and also paid off 80% of their current outstanding debt, but was denied based on the past credit certainly doesn’t make much sense. Circumstances change daily and the fact that it takes FOREVER for debt payoffs to reach the 3 credit reporting agencies doesn’t help. Also, what about people who already have an FHA and are looking to re-finance to an FHA 203k after already increasing the value of the home over $100,000, can’t because of past credit problems. Think before you type.
I think everybody here is missing the point, all this credit junk isn’t what got america into this problem…It’s because investors were working with appraisers and loan people so that EVERYBODY made a buck and others were stuck with Over Appraised houses, sub prime loans, HELOCs they never should have gotten and ARMs loans…They were giving house loans to anybody with a drivers license that at least looked a little bit real. The American people got screwed and a ton of people made money, but don’t you worry Obama is all about raising taxes to help offset the losses to the banks on loans they NEVER should have approved in the first place. They Screw us and Obama bails them out. How nice!
We are a Ginnie Mae endorsed lender and can do FHA loan for Refi or purchase down to a 560 credit score. This includes Jumbo loans to county limits. Call me at 800-779-1239 Ext. 369 and maybe I might be able to help…..
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