April 17, 2014
We hear it all the time!
What's the minimum credit score for an FHA loan?
The answer is. It depends on who you ask.
All the major banks Wells Fargo, Bank of America, Chase, Citigroup, etc. have minimum credit score requirements. When you apply for an FHA mortgage at a major bank and they tell you their minimum credit score requirement is 640. This does not mean that it's FHA's minimum credit score. It means that they are the bank's minimum credit score requirements.
After the financial crisis of 2008 all the major banks raised their standards for approving FHA loans. Because the banks make the rules for loans they will approve, they may require a minimum credit score of 640 for their loans. These guidelines are the bank's guidelines. What this means is, all the major banks including Wells Fargo, Bank of America, Chase, Citigroup, etc. banks make the rules for loans they will approve.
January 20, 2010 - FHA announced a new policy to address risk.
FHA has changed the minimum credit score for new borrowers:
August 15, 2013 - New borrowers may also be eligible for an FHA insured loan on a purchase transaction after 12 months from the completion, discharge, trustee's sale if the borrower meets the requirements for extenuating circumstances Economic Event.
Borrowers with a prior bankruptcy, foreclosure, deed-in-lieu, or short sale may be eligible for an FHA insured loan if the bankruptcy, foreclosure, deed-in-lieu, short sale was the result of a documented extenuating circumstance.
October 15, 2013 - New FHA does not require collection accounts to be paid off as a condition of mortgage approval. However, FHA does recognize that collection efforts by the creditor for unpaid collections could affect the borrower’s ability to repay the mortgage.
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