Credit Score Needed To Buy a Home 

Credit Score Needed To Buy a Home



Credit score needed to buy a home - The FHA has taken the following steps:

  • 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%
  •  Credit score needed to buy a home minimum credit score 500

The Federal Housing Administration insures FHA loans and did not used to require a minimum credit score. The new FHA policy changes requires a minimum credit score of 580 for 3.5% down payment and anyone purchasing a home with a score lower than 580 will require 10% down payment.


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, Judgments, Federal Debts

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.

Any judgments will have to be paid in full prior to closing. Borrowers who are delinquent on any federal debt, such as tax liens, student loans, etc., are not eligible.


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.

Chapter 13 bankruptcy 

FHA will consider approving a borrower who is still paying on a Chapter 13 Bankruptcy if those payments have been satisfactorily made and verified for a period of one year. The court trustee's written approval will also be needed in order to proceed with the loan. The borrower will have to give a full explanation of the bankruptcy with the loan application and must also have re-established good credit, qualify financially and have good job stability.

  • FHA minimum credit score is 500
  • Credit score needed to buy a home 

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