Mortgage Minimum Credit Score

Mortgage Minimum Credit Score

We hear it all the time!

What's the minimum credit score for an FHA loan?

The answer is. It depends on who you ask.

All the major banks Wells Fargo, Bank of America, Chase, Citigroup, etc. have minimum credit score requirements. When you apply for an FHA loan at a major bank and they tell you their minimum credit score requirement is 640. This does not mean that it's FHA's minimum credit score requirements. It means that these are the bank's minimum credit score requirements.

Because the banks make the rules for loans they will approve they may require a minimum credit score of 640 for their loans. These guidelines are the bank's guidelines. What this means is that all the major banks including Wells Fargo, Bank of America, Chase, Citigroup, etc. banks make the rules for the loans they approve.

FHA announced a policy change to address risk and strengthen finances. FHA changed the minimum credit scores for new borrowers:

• New borrowers will now be required to have a minimum credit score of 580 to qualify for FHA's 3.5% down payment program
• New borrowers with less than a 580 credit score will be required to put down at least 10%
• This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well
• This change were posted in the Federal Register in February 2010 and after a notice and comment period, went into effect in 2010
  

FHA makes the rules for loans they will insure and as of January, 2016 the minimum credit score for an FHA loan is 500. In the old days, FHA did not have a minimum credit score requirement, these changes went into effect in 2010.

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FHA minimum credit score is 500.

New FHA policy requires a minimum credit of 500 to buy a home or refinance. In the old days FHA did not require a minimum score. These changes went in to effect in 2010.

To buy a home or refinance minimum FICO score of 500.

Borrowers with scores above 580 require a 3.5% down payment. The funds can be a gift from a family member and up to 6% seller concession is allowed.

If you have FICO scores below 580 new FHA changes require a 10% down payment. The funds can be a gift from a family member and up to 6% seller concession is allowed.

To refinance your mortgage you need a minimum FICO score of 500.

Borrowers with a FICO score above 580 can refinance up to a 97.5% loan-to-value on a rate and term refinance. And up to 85% cash out refinance with a FICO score above 580.

If you have FICO score below 580 new FHA changes require a maximum loan-to-value of 90% for a rate and term refinance. And up to 75% cash out refinance with FICO score below 580.

Apply now.

Most lenders require a minimum FICO score of 640 for a FHA loan we don't.

Whether you're planing to buy your first home, refinance, lower your monthly payments, buy a second home, consolidate debt or get pre-approved for a mortgage. A perfect FICO score is not needed for an FHA loan approval.

In fact, even if you have had credit problems, such as a bankruptcy, it's easier for you to qualify for an FHA loan than a for a conventional loan. Scores down to 500 are accepted if there are compensating factors that offset the credit risk.

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We look forward to working with you.

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