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One of the most commonly asked questions about any home loan involves credit qualifications. Do you wonder if your credit is good enough to be approved for a mortgage? This is a very important question but the timing of that question is equally important.

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FHA.com is a privately owned website, is not a government agency, and does not make loans.

Qualifying for an FHA Mortgage

March 4, 2022

Qualifying for an FHA Mortgage
One of the most commonly asked questions about any home loan involves credit qualifications. Do you wonder if your credit is good enough to be approved for a mortgage? This is a very important question but the timing of that question is equally important.

It is a very smart idea to begin working on credit scores the moment you decide to commit to purchasing a home--the earlier the better. There isn’t just a single FICO score to aspire to, there are multiple factors at work.

How does a borrower get approved for any mortgage? Your lender will review factors including your FICO scores plus loan repayment history, credit utilization, and employment stability. The FICO numbers will vary depending on the lender and other variables, but what does the FHA loan program require to be approved for your home loan?

FHA loan qualifications include FICO scores of 500 or higher. That is the FHA minimum standard and is not to be confused with any additional lender’s credit score requirements. Those may be higher than 500.

To qualify for the lowest possible down payment on an FHA mortgage you will need to meet the FHA 580 or higher FICO score requirement plus any other lender standards above that which might apply.

An FHA lender wants to be able to verify two years of employment history though that does not necessarily mean two years with the same employer. The lender needs to see your income is reliable and from approved sources (which the lender can verify).

Are you a seasonal worker? Are you employed as a contractor, or are you a self-employed small business owner? Your loan officer may ask you for some additional paperwork but do not count yourself out of the running just because your income is not based on a typical 9-5 job.

Some borrowers have complicating factors. For example, have you filed for bankruptcy, or have you experienced a foreclosure?

That won’t keep you out of the FHA home loan program, but you may have to sit out a minimum amount of time known in the industry as a “seasoning period” before you can apply for a new FHA mortgage loan.

Some borrowers come to the home loan process with credit issues which may include unpaid or delinquent federal debts. In these cases, you must be able to show the lender the debt has been managed to the satisfaction of the government--be ready with proof or documentation of payment plans, and how many on-time payments under the plan have occurred since the agreement began.

If you aren’t sure how these issues might affect your ability to qualify for a mortgage or if you need advice on how to get financially prepared for a home loan, talk to a participating FHA lender who has experience with these loans and how they get approved.

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