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While the 580 FICO score minimum is a major factor in how an applicant will pay for a mortgage, your credit score is not the only thing the FHA takes into account.

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November 11, 2019
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FHA.com is a privately owned website, is not a government agency, and does not make loans.

Higher Credit Helps You Get a Loan

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FICO Scores Over 580 Help Borrowers Qualify For FHA Loans

Home buyers looking to take advantage of great FHA loan benefits should already know they need to establish the best possible credit rating. Applicants with a better credit rating increase their options for mortgage or refinance loans. In order to qualify for the low 3.5 percent FHA loan down payment, applicants will need a FICO score of at least 580. Those that don't meet that criteria will have to put a down payment of 10 percent on the mortgage they want.

FHA loans are designed to help home buyers, so these government-insured loans usually come with more lenient requirements than typical mortgages or refinancing terms from traditional lenders. While the benefits don't vary much between someone with good credit and excellent credit, there is a very noticeable margin for those with bad credit and average to good credit.

Why You Need a Better Credit Score

While the 580 FICO score threshold is a major factor in how an applicant will pay for a mortgage, your credit score isn't the only thing the FHA takes into account. Payment history, bankruptcies and foreclosures are also issues that the agency looks at. While these factors may hurt your credit score, they don't necessarily eliminate you from loan eligibility.

That doesn't mean, however, that you can neglect your credit. While the FHA is lenient enough to help those with bad credit ratings, they also require recent credit history to be in good standing.

Extenuating circumstances like job loss, injury or anything else that prevented you to pay in a timely manner can, and most likely will, be taken into account. However, if you have demonstrated you purposely neglected payments or your credit rating, your chances of qualifying for an FHA loan will be reduced.

Be Safe, Not Sorry With Your Credit

Obviously, it's better to have good credit than bad credit when applying for any loan. Don't take your credit history for granted, though, because you might find an error or inaccuracy that could hurt your chances of qualifying for an FHA loan. Instead of going through the headache of disputing your application with your agency and holding up the process, be proactive and make sure your credit score and ratings are where they should be before approaching the FHA.

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FHA Loan Articles and Mortgage News

FHA One-Time Close Mortgage Interest Rates

November 5, 2019 - Why do borrowers who want to build a house on their own lot turn to an FHA One-Time Close construction loan instead of conventional construction loans? Perhaps for reasons that include a lower mortgage loan interest rate and a lower down payment requirement.

Who Can Help With Your Home Loan Down Payment?

November 3, 2019 - The idea of planning for ten years or so to buy a home is actually a fairly sound one if you consider having to save up for the down payment, closing costs, moving expenses, and new appliances where needed.

Who Offers the Lowest Down Payment Option?

November 1, 2019 - Do you need a home loan? Are you looking for a lower down payment? Borrowers often want to know who offers the lowest mortgage loan interest rates and the lowest down payments, not realizing that they have a say in what is offered.

FHA and VA Construction Loan Benefits

October 29, 2019 - For some borrowers, the advantages of FHA and VA construction loans include being able to design a home to a specific need or plan, especially if the house hunter needs to install features not considered common among the available home sales in the area.

Build a House on Your Own Land With an FHA Loan

October 28, 2019 - You can build on your own lot using an FHA mortgage, even as a first-time home buyer. You will get the same 3.5% down payment minimum on an FHA construction loan as you would buying existing construction real estate.