2016 FHA loan requirements

2016 FHA loan requirements


FHA after bankruptcy

FHA after foreclosure

FHA after short sale


New FHA policy requires a minimum credit of 500 to buy a home. In the old days FHA did not require any credit score. These changes went in to effect in 2010. FHA minimum credit score is 500 to buy a house or refinance. Borrowers with a credit score above 500 are eligible for an FHA loan.

New borrowers will now be required to have a minimum credit score of 580 to qualify for FHA 3.5% down payment. New borrowers with less than a 580 credit score will be required to put at least 10% down payment.

Borrowers with a score above 580 can refinance up to a 97.5% loan-to-value on a rate and term refinance. And up to 85% cash out refinance with a credit score above 580.

The FHA has taken the following step:

  • Update the combination of credit scores and down payments for new borrowers
  • New borrowers will now be required to have a minimum credit score of 580 to qualify for FHA's 3.5% down payment program
  • New borrowers with less than a 580 credit score will be required to put down at least 10%
  • 2016 FHA loan requirements
  • First time home buyer 2016

No credit history

Three lines of credit are necessary to apply for an FHA loan. However, in the event a borrower does not have sufficient credit on their credit report the FHA will allow substitute forms. FHA allows minimum trade lines if you have credit scores.

Late payments

During an underwriter analysis of borrower credit, the overall pattern of credit behavior is being reviewed rather than isolated cases of slow payments. If a good payment pattern has been maintained, regardless of a specific period of financial difficulty preceded it, the borrower may escape disqualification.

Collection accounts

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.

  • If evidence of a payment arrangement is not available, the lender must calculate the monthly payment using 5% of the outstanding balance of each collection, and include the monthly payment in the borrower’s debt-to-income ratio.

Chapter 7 Bankruptcy

At least two years must have elapsed since the discharge date of the borrower and / or spouse's Chapter 7 Bankruptcy, according to FHA guidelines. This is not to be confused with the bankruptcy filing date. A full explanation will be required with the loan application. In order to qualify for an FHA loan, the borrower must qualify financially, have re-established good credit, and have a stable job.

Debt to income

FHA loan requirements include a maximum debt to income ratio. When a borrower applies for an FHA mortgage, they are required to disclose all debts, open lines of credit, and all possible approved sources of regular income. Using this data, the bank and the FHA calculate the borrower's debt-to-income ratio.

FHA maximum debt to income ratio is 54.99%. Most lenders will limit maximum debt-to-income to under 50% and some lenders to 45%.

  • 2016 FHA loan requirements minimum credit score is 500
  • HUD homes for sale $100 down payment.


2016 FHA loan requirements

Apply Now!

Call us 888.958.4228


Mortgage World Home Loans of New Jersey is an online mortgage company specializing in FHA loans for first time home buyers. To buy a house  with 3.5% down payment and a minimum credit score of 580 using an FHA loan.


We look forward to working with you.

Apply Now

Call us 888-958-5382


www.MORTGAGE-WORLD.com LLC is an online mortgage company specializing in FHA loans for first time home buyers.


We look forward to working with you.

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Minimum credit score needed to

qualify to purchase a home or refinance


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Call 888.958.4228

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Call 800.516.9166

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FHA loan

Requires a minimum credit score of 500 to buy a home with a low down payment

FHA minimum

credit score 500


VA loan

Requires a minimum credit score of 500 to buy a home with zero down payment

VA minimum

credit score 500


Fannie Mae

Requires a minimum credit score of 620 to buy a home

Fannie Mae minimum

credit score 620


Freddie Mac

Requires a minimum credit score of 620 to buy a home

Freddie Mac minimum

credit score 620


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888-958-4228

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