What is the Minimum Credit Score for FHA?

Finding out the Minimum Credit Score for FHA Loans

Federal Housing Administration or FHA loans are a great help for many first-time home buyers. This is because they offer mortgage loans with lower down payments. But what is the minimum credit score for FHA? And what are the benefits of getting an FHA loan?

FHA Loan Federal Housing Administration

The Minimum Credit Score for FHA

Now for those of you who wish to apply for an FHA loan, the minimum required credit score for you to have is 500. For those people who fall under a credit score of between 500 to 579, you will have to make a 10% down payment to be able to secure the loan that you need.

Having said that, there are a few things that you need to know about minimum credit scores and the FHA:

FHA Loans Depend on the Lenders

Even if your credit score reaches the minimum required by the FHA, this is still no guarantee that you will be approved for an FHA loan. This is mainly due to the fact that banks and mortgage companies that offer these loans are not legally required to follow the guidelines of the FHA completely.

Actually, most companies impose stricter guidelines for their borrowers to ensure that they don’t approve too many bad FHA loans that get defaulted a few years into the contract. This is because the Federal Housing Association penalizes them if they do so.

The FHA has two minimum scores

Yes, this can be confusing for some but there truly are two minimum scores for FHA loans. The absolute minimum FICO credit score for you to qualify for this type of loan is 500. But this won’t get you eligible for a lower down payment.

You will need a minimum of at least 580 for you to be able to get the down payment option of 3.5%. This option is one of the main reasons why people look into getting an FHA loan in the first place. So if you plan on obtaining this type of loan, it is best to make sure that your credit score reaches higher than 579.

Advantages of an FHA Loan

Paper with words fha loan on a wooden background.

There are a lot of advantages and protection that a person can get from getting an FHA loan as opposed to the conventional mortgage loans out there. Here are a few:


FHA loans are insured by the agency making it easier to obtain through lenders. This means that the FHA will be able to cover the loan amount that you take out in the event that you are not able to pay back what you owe and your loan gets defaulted.

This is also one of the reasons why lenders are more lenient in approving people to get this loan. As long as you meet the requirements needed to obtain it, there won’t be a reason why your request won’t get approved.

Easier Qualification

The loan offers that you get from the FHA are way easier to qualify for than conventional loans out there. This is because they cater to people who want to own their dream homes. You won’t have to suffer through a strenuous application process to see if you even qualify. With FHA loans, you won’t have to worry too much about shady credit history or a not so good credit score.

Better Interest Rates

Unlike most mortgage lending companies, the FHA actually makes it more possible for you to afford the home that you want to purchase. This means that they offer lower interest rates on their FHA loans.

This is one of the best advantages of getting a loan like this. Since most mortgages can span a time period of more than 5 to 20 years, the lower the interest that you have to pay, the better it will be for you.

Better Fees

FHA Home Loans Shows Federal Housing 3d Rendering

You may have come across mortgage loans that have tons of additional fees on top of the interest that you will have to pay. They may offer lower interest, but the added costs can really add up. FHA loans charge lower fees than these conventional loans do. They offer affordable mortgage insurance, closing costs, and more.

Accepts Bankruptcy or Foreclosures

Even if you have filed for bankruptcy or have gone through foreclosure the past few years doesn’t mean that you won’t be eligible to qualify for an FHA loan any longer. All you have to do is to meet all the other requirements that the FHA has for you to qualify.

This means that you will have to re-establish a good credit history and more to be able to get the loan that you need. However, this is not saying that the lenders you go to will approve your request. You will have a harder time having a lender approve your loan but as long as your requirements are in order, there is no reason for you not to qualify.

Bottom line

Being able to obtain an FHA loan can make the difference between you being able to buy your dream home or not. All you have to do is meet the necessary requirements that this type of loan needs. As long as your credit score reaches 500 and up, you will be qualified to get your FHA loan.

But remember, only a credit score of 580 above will be eligible for the 3.5% down payment option. This means that you may have to improve your credit rating a bit more before applying for this type of loan in the future.

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