New FHA policy requires a minimum credit of 500 to buy a home. In the old days FHA did not require a minimum score. These changes went in to effect in 2010.
FHA minimum credit score is 500 FHA loan 2016.
To buy a home or refinance you will need a minimum FICO score of 500. FHA minimum credit score is 500.
Borrowers with scores above 580 require a 3.5% down payment. The funds can be a gift from a family member and up to 6% seller concession is allowed.
If you have FICO scores below 580 new FHA changes require a 10%
down payment. The funds can be a gift from a family member and up to 6%
seller concession is allowed.
FHA closing cost. FHA regulates some of the closing costs associated with a FHA loan. FHA allows the seller to pay up to 6% of the sales price for closing cost.
Generally, a borrower who has made timely payments for the last 12 months serves as a guide and demonstrates their willingness to repay future credit obligations. New FHA Policy changes require minimum FICO score to be 580 for a 97.5% loan-to-value refinance or a 85% loan-to-value cash out refinance. These FICO requirements went into effect in the spring 2010. However, most individual lenders will still require credit scores higher than 640.
To be eligible for an FHA loan your monthly housing costs (mortgage principal and interest, property taxes, and insurance) must meet a specified percentage of your gross monthly income (31% ratio). Your credit background will be fairly considered. At least a 500 FICO credit score is required to obtain an FHA approval. You must also have enough income to pay your housing costs plus all additional monthly debt (50% ratio). These ratios can be exceeded somewhat with compensating factors.
What documentation will I need?
• Personal tax returns for the past 2 years
• Current pay stubs for the past month
• Bank statements for last 2 months (all pages)
• Latest retirement statement for each active account (all pages)
• Sales contract (purchase)
• Clear copy of Driver’s License (front and back)
• Clear copy of SS card (front and back)
• Addresses and loan information of other real estate owned (if any)