FHA minimum credit score is 500 to buy a house or refinance.
New FHA policy requires a minimum credit score of 500 to buy a house or refinance. Borrowers with a credit score above 500 are eligible for an FHA loan.
New borrowers will now be required to have a minimum credit score of 580 to qualify for FHA 3.5% down payment. New borrowers with less than a 580 credit score will be required to put at least 10% down payment.
Borrowers with a 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 credit score above 580.
The FHA has taken the following step:
- Update the combination of FICO scores and down payments 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%
- FHA loan requirements 2014
No credit history
Three lines of credit are necessary to apply for an FHA loan. However, in the event a borrower does not have sufficient credit on their credit report the FHA will allow substitute forms. FHA allows minimum trade lines if you have credit scores.
Late payments
During an underwriter analysis of borrower credit, the overall pattern of credit behavior is being reviewed rather than isolated cases of slow payments. If a good payment pattern has been maintained, regardless of a specific period of financial difficulty preceded it, the borrower may escape disqualification.
Collection accounts
FHA does not require collection accounts to be paid off as a condition of mortgage approval. However, FHA does recognize that collection efforts by the creditor for unpaid collections could affect the borrower’s ability to repay the mortgage.
- If evidence of a payment arrangement is not available, the lendermust calculate the monthly payment using 5% of the outstanding balance of each collection, and include the monthly payment in the borrower’s debt-to-income ratio.
Chapter 7 Bankruptcy
At least two years must have elapsed since the discharge date of the borrower and / or spouse’s Chapter 7 Bankruptcy, according to FHA guidelines. This is not to be confused with the bankruptcy filing date. A full explanation will be required with the loan application. In order to qualify for an FHA loan, the borrower must qualify financially, have re-established good credit, and have a stable job.
FHA loan requirements 2014 minimum credit score to qualify is 500.
Source: http://www.fha-world.com/fha-loan-requirements-2014.html
Great information to know. Do these qualifications affect decisions for owner financing?
Monica, I would say the answer is “no”.
Owner finance sellers usually don’t ask for your credit report, when you’re buying.
But when you are selling on owner financing, you want to know if they’re credit is “good, bad or ugly” as Ron says.
I think the reason is the gauge how likely and quickly they will be able to cash you out with a new loan.
But, as always, cash is king. If they can pay 20% down, take it, no matter how low their credit scores are. They can always rebuild their credit. And, you can encourage them to do that.
Thanks for sharing…very valuable info
Same two year rule for a Chapter 13 bankruptcy? Or, are those treated differently?
Does anyone know what the new VA mortgage requirements are?
I thought FHA loans were for first time buyers only. Is this still true?
If I remember correctly, FHA loans are not ONLY for first time buyers, but I don’t recall the specific criteria for other qualifying situations.
FHA only allows you to hold one of their loans, first-time or tenth time. Wow the 500-580 category is really underadvertised. Will follow up on that thanks!
Thank you, Steve.
no kidding!
ok cool thans Ron
Good to know for our cash customers. Thanks!
What about income and debt-to-income ratios?
who do we talk with at the bank about this program
I think with owner financing it would be whatever the owner decided they wanted to take, as credit score.
GREAT INFO
Thanks for the info on this.
good to know
Thanks Ron, great information on 2014 FHA Loan Requirements. The Chapter 7 Bankruptcy info will probably surprise some Chapter 7 Bankruptcy filers. It’s good to know so customers that think they don’t qualify can know the rules.
http://www.fha-world.com/fha-loan-requirements-2014.html is a broken link. Where can I find the correct one?
I wonder if an FHA loan is preferred to a conventional loan.
Above 580 FICO your client can; as before; qualify for the 3.5 percent down payment program; Under 580 you client, will need 10% down-payment to apply. Check on non conforming; jumbo or conforming loans? and impounded account fees i.e. up front MMI cost and related loan FHA fees/insurance can be excessive.
All the Best.
Thanks for this great information.
What about for Chap 13 bankruptcy?
I just love the fact that you are a wealth of information. The link that you provided has been updated to the following link: http://www.fha-world.com/fha-purchase.html. This will give a person the exact page that gives the minimum credit score needed for different types of loans. Thank you again for the lovely information that you provide.
Thanks for sharing…good to know
Good info from Ron’s team!
Do we have updated fha information. I understand that fannie and freddie also offer a 3.5% down payment program.
Great information
If I read this correctly this information is from 2014. Do we have any current (2018) information and/or updates available?
Thanks Ron for the info
Thanks Ron! Is 2014 the latest update? Have there been any changes in the last 4 years?
Awesome updates! Thanks, Ron. You cover everything here!
Didn’t really read this…just needed an extra point for my Gold Club points because it didn’t calculate my comment I made after watching the 20 minute video;)
PS. I’ve read it before, though, and it’s awesome how Ron stays on top of everything…just wish the computerized comments point counting system would do the same.lol
Can I obtain an FHA loan for an investment property or only my primary residence?
Very good to know. Very useful.
FHA Loan Requirements for 2019
use this link to get more information:
https://www.fha.com/fha_loan_requirements
Thanks! This is awesome!
Thank you for this information. I am sure that this information shall serve us well.
I thought that we weren’t supposed to be getting bank loans. So, why would I care about FHA loans?
Great information.
Its very clear that financial standards have tightened and increased making it far more difficult to get approved for these terms.
Interesting. I remember going to an FHA loan seminar some years ago. Writing a “credit explanation letter” by the loan originator was a big deal in getting the loan approved in underwrtiing. With these defined credit score levels I wonder if a credit explanation letter is even done anymore ?