Credit Score Requirements for FHA Loans
FHA loans offer flexible credit and down payment options for buyers, making it an ideal choice for buyers with less-than-perfect credit.
FHA home loans are government-backed mortgages insured by the Federal Housing Administration. These mortgage loans are sometimes easier to get than conventional home loans due to their less stringent credit requirements and lower down payment requirements. FHA loans are a great option for first-time home buyers and those with low-to-moderate incomes, but anyone can apply. You can use these loans for the purchase of a primary residence.
FINDING YOUR IDEAL LOAN
How Credit Affects Your Home Buying Options
Your credit history directly impacts whether you’re approved for an FHA mortgage. It also determines your mortgage interest rate. Borrowers with low credit scores and more recent credit problems have a higher risk of default. So they typically pay higher mortgage rates, which increases the cost of their loan. A higher rate means paying more in interest over the life of the loan, as well as a higher monthly payment.
620
Standard Credit Score Needed for Conventional Loans
629
Average 20-year-old's Credit Score
540
Our minimum credit score for FHA *
REQUIREMENTS FOR AN FHA LOAN
Official HUD Guidelines for Credit Score
One of the benefits of using an FHA loan is that this type of mortgage is great for home buyers who may have a lower credit score. The U.S. Department of Housing and Urban Development (HUD) provides credit guidelines for Federal Housing Administration (FHA) home loans. However, each lender can set their own credit score requirements. Our minimum credit score for an FHA loan is 540*. To visit the HUD website and learn more about FHA loans, click here.
Average Home Buyer Credit Scores
Credit scores range from 300 to 850. Average credit scores vary depending on age group and the length of a person’s credit history. According to the credit reporting company Experian, consumers over the age of 60 have an average credit score of 749. Those between the ages of 20 and 29 have an average score of 662.
FHA Loans with No Credit
If you haven’t established credit yet, FHA lenders will sometimes allow the use of non-traditional credit to qualify for a mortgage. This can include a good payment record for utility payments, rental payments, and auto insurance payments. Applicants must also have sufficient income to qualify for an FHA home loan. Lenders require copies of tax returns, W2s, paycheck checks, and bank account statements. Check with your lender on their specific requirements for FHA loans with no credit.
Credit Score Needed for FHA Loan Approval in 2023
The minimum credit score for an FHA loan varies by mortgage lender, but typically lenders require a credit score of 540* or higher.
FHA Lenders Look at More Than Just Your Credit Score
Keep in mind that lenders look at more than your credit score when approving an FHA mortgage application. They’ll also evaluate your employment record, income history, and your assets. Your income must be stable and consistent, and you must have sufficient cash reserves to cover your down payment and closing costs.
Getting an FHA Mortgage After a Bankruptcy, Foreclosure or Short Sale
It is easier to get approved for an FHA home loan after credit problems, compared to other loan programs. You might qualify for a loan two years after bankruptcy, three years after a foreclosure, and three years after a short sale. Talk with a loan expert to find the best home financing solution for you and your goals.
Our company is not endorsed by, nor acting on behalf of or at the direction of the U.S. Department of Housing and Urban Development, Federal Housing Administration, U.S. Department of Agriculture, Veterans Administration or the Federal Government.
* Credit scores under 580 require a minimum of 10% down payment.