Mortgage World

Mortgage World

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 loan 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.

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 that all the major banks including Wells Fargo, Bank of America, Chase, Citigroup, etc. banks make the rules for the loans they approve.

On January 20, 2010 FHA announced a policy change to address risk and strengthen finances. FHA changed the minimum credit scores 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%
• This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well
• This changes went into effect in 2010
• Mortgage World
  

FHA makes the rules for loans they will insure and as of February, 2013 the minimum credit score for an FHA loan is 500. In the old days, FHA did not have a minimum credit score requirement, these changes went into effect in 2010.

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