FHA Loan Credit Score Requirements

By February 10, 2012
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FHA loan credit score requirements for 2011, 2012 and 2013 can change from time to time due to changes in legislation, lending requirements, FHA regulations and underwriting requirements.

76800244FHA loans make it possible today for people who may have less then perfect credit, to still buy a home regardless of his or her low credit score. What is great about this program is, that you do not require a large down payment to buy a house, with a small down payment you too can become a home owner.

FHA loans make it easier for you and others to qualify for homes. The reason why it is easier, is that they are insured, meaning if you or others for whatever reason cannot pay the loan back, FHA makes a guarantee to the bank that they will cover the loan in case of you defaulting on the mortgage loan given by them to you.

So this is why mortgage lenders that have a FHA program, are more willing to give you a loan if you pass their basic loan requirements, because the risk is lifted with the FHA guarantee.

What is great also about these loans, just about any body can qualify for these loans since there are no ceilings set on how much money you must make or not make to qualify. So for those that have great incomes can also apply for a mortgage, you are not discriminated against due to your higher income.

Some of the changes come as part of the new laws that close legal loopholes, improve the fairness of the FHA mortgage loan process, or modernize the FHA loan program. Other alterations are made in response to current market conditions and economic issues.

Because of the changing nature of the FHA home loan program, the information new house hunters may have gathered a year or two ago when considering a new home may not be the same if they chose to wait to start the loan application process.

This is definitely the case for any potential borrower who investigated their FHA loan options before September 3, 2010. That’s the date the FHA issued new guidance on the minimum scores needed for certain FHA guaranteed home loans.

Minimum credit score requirements for FHA home loans depend on which FHA loan product the applicant needs. Generally speaking, to get maximum financing on typical new home purchases, applicants should have a score of 580 or better. Those with scores between 500 and 579 are, according the FHA guidelines, “limited to 90 percent Loan To Value.

Applicants who have a minimum decision credit score of less than 500 are not eligible for FHA mortgages. Those with scores of 500 or better are eligible for 100% FHA loan financing with no down payment required when using the FHA 203(h), Mortgage Insurance for Disaster Victims.

The FHA does make allowances for loan applicants with a “non-traditional credit history or insufficient credit” may be able to be approved for an FHA loan if they meet FHA requirements for such circumstances.

The minimum credit scores listed here are in effect for most FHA home loans for single family residences with a few exceptions which include (but are not limited to) Title 1 Home Equity Conversion Mortgage loans and HOPE For Homeowners loans. Always ask an FHA loan expert or your local FHA lender about your credit score and what you qualify for.

Don’t assume you cannot be approved for an FHA insured home loan-do you have changes in your credit score since the last time the credit reports were run? You may have options that can improve a poor credit score over time. Some potential borrowers may need to spend a year or so repairing bad credit and establishing a reliable payment history.

Those with past credit problems can often improve their scores over time and become eligible even under the new updated FHA minimum score requirements. The first step for you, is to request help from FHA.gov for credit counseling or first time home buyer counseling!!!

Now that you are more informed, why don’t you contact your local bank to discuss the FHA credit score requirements for 2012, to see if you too can also become a proud home owner.