The FHA usually requires two lines of credit for qualifying applicants. An FHA loan might make the difference between owning your dream house comfortably and turning it into a financial nightmare.

FHA.com: Home Purchase and Refinance Loans

FHA Loan Programs for 2023

The most recognized 3.5% down payment mortgage in the country. Affordable payments w/good credit.

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

Credit Requirements for FHA Loans

Good Credit History Makes it Easier to Qualify

FHA loans provide great assistance to many first-time homebuyers by offering mortgage loans with lower down payments. While this is a benefit for many people, recent changes in policy may have put the loans just out of reach for some would-be homeowners with questionable credit history.

Credit History and Score Requirements

FICO Scores

For those interested in applying for an FHA loan, applicants are now required to have a minimum FICO score of 580 to qualify for the low down payment advantage, which is currently at around 3.5 percent.

If your credit score is below 580, however, you aren't necessarily excluded from FHA loan eligibility. Applicants with lower credit scores will have to put down a 10 percent down payment if they want to qualify for a loan.

So if you're planning to buy a house, and your credit score doesn't meet the minimum, you should weigh the advantages and disadvantages of putting down a larger down payment or using those funds to try and improve your credit score first.

Benefits of an FHA Loan

The reason why FHA loans are so popular is because borrowers that use them are able to take advantage of benefits and protections unavailable with most traditional mortgage loans. Loans through the FHA are insured by the agency, so lenders are more lenient. Here are a few benefits you can enjoy with an FHA loan:

  • Easier to Qualify
    While most loans exclude applicants with questionable credit history and low credit scores, the FHA makes loans available with lower requirements so its easier for you to qualify.
  • Competitive Interest Rates
    You've heard the horror stories of subprime borrowers who couldn't keep up with their mortgage interest rates. Well, FHA loans usually offer lower interest rates to help homeowners afford housing payments.
  • Lower Fees
    In addition to lower interest rates, you can also enjoy lower costs on other fees like closing costs, mortgage insurance and others.
  • Bankruptcy / Foreclosure
    Just because you've filed for bankruptcy or suffered a foreclosure in the past few years doesn't mean you're excluded from qualifying for an FHA loan. As long as you meet other requirements that satisfy the FHA, such as re-establishment of good credit, solid payment history, etc., you can still qualify.
  • No Credit
    The FHA usually requires two lines of credit for qualifying applicants. If you don't have a sufficient credit history, you can try to qualify through a substitute form.

For many homebuyers, using an FHA loan can really make the difference between owning your dream house comfortably or turning it into a financial nightmare. The FHA provides a wealth of benefits for applicants that qualify, so make sure you're making full use of them.

Credit Scores for FHA Loans

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FHA Loan Articles and Mortgage News

Home Loan Advice From a Leading Credit Bureau

September 17, 2023 - Credit scores and what it takes to be approved for a mortgage are among the most frequently asked-about topics related to FHA home loans. What does Experian recommend a borrower do to better qualify for an FHA mortgage or any other type of home loan?

How Much Does a First-Time Home Buyer Have to Put Down?

September 15, 2023 - How much money should a first-time home buyer save for a down payment? It depends on the type of home loan you want, whether you want to avoid mortgage insurance, and whether your FICO scores are high enough to qualify for the lowest down payment.

How to Get a Lower Mortgage Rate

September 12, 2023 - CBS News MoneyWatch published an article in the last days of August 2023 noting that mortgage rates are hovering in the 7% range, with no real end in sight to the higher interest rates reported at press time. This article lists some of the top ways you can get a lower mortgage rate.

FHA Loans and Down Payment Requirements

September 6, 2023 - FHA home loans have plenty of differences from conventional loans, including down payment requirements and the amount of that down payment. FHA loans come with bare-minimum down payment amount of 3.5% of the contract sales price of the home with the right credit scores.

Why Some Borrowers Won't Wait to Buy a Home in 2023

September 3, 2023 - Interest rates on home loans are high in 2023. In the earliest days of September, home loan interest rates were listed between 6.6% and 7.6%. This is a marked increase from the heady days of 2020, when on 16 September 2020, home loan interest rates were listed below the 3% line.