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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.

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September 21, 2019
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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 home buyers 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 home buyers, 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.

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FHA Loan Articles and Mortgage News

FHA Home Loan Approval Rules About Debt Ratios

September 11, 2019 - What does it take to get FHA home loan approval? Part of the equation is in your credit scores, another part is your employment history, but an equally crucial portion involves the amount of debt you carry versus the amount of income you have.

Refinance Loan Tips: Before Your Application

September 3, 2019 - Is your neighborhood’s property values going up? Or are they moving in the opposite direction? Depending on what kind of refinance loan you need, this can be an important factor in deciding whether to commit to a refinance loan.

Do You Need Down Payment Assistance for Your Home Loan?

September 2, 2019 - Do you need down payment assistance for your home loan? FHA loan rules permit such help, but if you have never applied for an FHA loan before, there are some things you need to know before getting started. FHA itself does not have a down payment assistance program, even for first-time home buyers. 

FHA Loan Approval Versus Changing Jobs

August 29, 2019 - If you have had a promotion with your current employer, or have been hired at a better position and/or for more pay with a new employer in such circumstances, the lender is likely to view such a move favorably unless there are complicating factors that need to be taken into account.

FHA Loan Advice for Those With Thin Credit

August 27, 2019 - Are you interested in a home loan but have thin credit? A borrower without much credit history can take some advice straight from one of the major credit reporting agencies, Experian, about making your credit history more attractive to a lender.

FHA.com Reviews

FHA.com is a one-stop resource for homebuyers who want to make the best decisions when it comes to their mortgage. With our detailed, mobile-friendly site, individuals can access information about different FHA products, the latest loan limits, and numerous other resources to make their homebuying experience easier. Take a look at some of the reviews from other FHA.com visitors!