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FHA loan eligibility requirements can be misunderstood. It's easy to assume FHA mortgages are only for low-income families, or that only first-time home buyers are eligible to apply for an FHA mortgage.

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FHA Loan Articles

News and Updates for Homeowners

What You Should Know About FHA Loan Eligibility

January 15, 2013 - FHA loan eligibility requirements can be misunderstood. It's easy to assume FHA mortgages are only for low-income families, or that only first-time home buyers are eligible to apply for an FHA mortgage.

The FHA does have guidelines stating who is eligible and who is not eligible to apply for an FHA mortgage or home loan refinance. Those guidelines include some basic requirements for credit scores and minimum ages of those who apply.

These rules can be found in HUD 4155.1, which includes these instructions to the lender:

"FHA insures mortgages made to individuals with valid Social Security numbers (SSN), and under the conditions described in this section, to state and local government agencies, and approved nonprofit organizations. Note: Employees of the World Bank, foreign embassies, etc., may not be required to have an SSN. Conclusive evidence of this exception must be provided."

FHA rules also specifically address the topic of FHA loan borrower age limits--some wrongly believe or assume there's a maximum age cutoff for approved borrowers. But FHA loan rules contradict this, stating, "There is no maximum age limit for a borrower. The minimum age is the age for which a mortgage note can be legally enforced in the state, or other jurisdiction, where the property is located."

FHA loans have credit standards, which can be found in HUD 4155.1 under the section "Determination of Credit Worthiness and Minimum Credit Score Requirements." These rules include the requirements for borrowers, co-borrowers, and co-signers. "When determining the creditworthiness of borrowers, coborrowers, or cosigners, the underwriter considers their
  • income
  • assets
  • liabilities, and
  • credit histories."
FHA Loan minimum credit scores are described in the rulebook as follows:
  • If the borrower's minimum credit score is above 580, they are eligible for maximum financing under FHA loan rules.
  • If the borrower's minimum credit score is between 500 and 579 the borrower is limited to a maximum LTV of 90%.
  • If the borrower's credit score is less than 500 the borrower is not eligible for an FHA home loan.
Please note that these are FHA minimums only--a lender is free to require higher credit score requirements in each case.

FHA minimum credit requirements are a very important part of the loan approval process. If you are concerned about your credit scores, contact the FHA at 1-800 CALL FHA and ask for a referral to an FHA approved housing counselor for help with pre-purchase issues.