FHA Credit Score Requirements for 2018
FHA loans are popular among many borrowers due to the fact that they have significantly more lenient credit requirements than most conventional mortgages. However, the FHA still has credit minimums that a borrower will need to reach in order to qualify. In particular, borrowers must have a FICO credit score of at least 500 in order be eligible for FHA home financing. In addition, borrowers must have a score of at least 580 in order to qualify for the FHA’s low down payment advantage. This permits borrowers to get approved for a loan with as little as 3.5% down.
While these credit score minimums have been put in place by the FHA, it’s important to realize that they are only minimums. Some lenders, especially those that are somewhat risk-adverse, may require borrowers to have credit scores of 620 or higher in order to be approved.
So, while you don’t have to have a great credit score to be eligible for an FHA loan, such as the 203b loan, if you have a better score, you might be able to put less down. In addition, lenders will typically reduce interest rates for borrowers with better credit scores— so, when it comes to buying a home with FHA financing, having great credit never hurts!