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FHA minimum standards for FICO scores is that the FHA requirements are just that--minimum requirements. Lenders can and often do apply higher credit score requirements to FHA loan applications.

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FHA Loan Articles

News and Updates for Homeowners

FHA Loan Credit Score Standards

September 16, 2013 - Are you considering your FHA home loan options? Some borrowers wonder about FHA credit score requirements and other issues related to FICO scores in general. We get many questions about FICO scores and how they relate to FHA loan approval.

One of the most important things to remember about the FHA minimum standards for FICO scores is that the FHA requirements are just that--minimum requirements. Lenders can and often do apply higher credit score requirements to FHA loan applications, so it’s important to know that your experience will vary from lender to lender. But the way the FHA asks the financial institution to interpret your credit data does not.

According to the FHA Frequently Asked Questions list on the official site:

“When the credit report reflects:
  • 3 credit scores (one from each repository) – the middle score is used
  • 2 credit scores – the lower of the two scores is used
  • 1 credit score – that score is used”

Borrowers who want to know if they qualify for an FHA loan should begin by taking a good look at their lowest credit score--work from there to see whether you may qualify for an FHA loan.

In some situations where there is more than one FHA loan applicant on the loan, the FHA has the following instructions for the lender:

“If there is more than one borrower, the lender must:
  1. Determine the decision credit score for each borrower
  2. Select the lower score (or lowest score if more than two borrowers).”

Again, the lower score comes into play.

Some FHA loan applicants come to the application process with a lack of credit or non-traditional credit, FHA loan rules have this to say for borrowers who want to apply for an FHA guaranteed mortgage loan in these cases:

“Borrowers with non-traditional credit (or insufficient credit) must qualify based on the guidance in Handbook 4155.1 4.C.3 If TOTAL renders an “accept/approve” risk classification, it can be relied on (subject to correct data) EXCEPT when none of the owner-occupants has a credit score. In such cases, the loan must be underwritten using the insufficient credit underwriting guidance.”

For those who are afraid their credit scores are too low to qualify, FHA referred housing counselor may be able to offer advice and counsel. Get in touch with the FHA at 1-800 CALL FHA and ask for a referral to a government-approved housing counselor near you.