FHA Credit Score Requirements
04 Jan

2017 FHA Credit Score Requirements

Credit Scores Differ By Lenders

If you are looking for the 2017 FHA Credit Score Requirements then you are in the right place as we will go into everything credit score related and how not all lenders are created equal. If you are a potential borrower don’t have a solid resource who can explain different credit score requirements before applying for a loan you could find yourself with mortgage denials.  Here at Mortgage Scenarios over 70% of our clients contact us after lenders and banks issued them a denial for reasons regarding their credit score.  The reason why a lot of borrowers are confused when it comes to credit scores is for the fact there is the following: Credit Score required per loan program guidelines, Credit Score lender will use to approve your loan, and the Credit Score you believe you have given 3rd party resources.  When you work with Mortgage Scenarios we will get your Tri-Bureau Credit Report and corresponding FICO.  Using this resulting FICO we can let you know exactly if your credit score will allow you to purchase a home.

If it is determined that your credit score is adequate for the 2017 FHA Credit Score Requirements and you run into a lender who still gives you a loan denial, you are probably dealing with a lender or bank who have Lender Overlays in place.  As mentioned previously Lender Overlays are additional requirements lenders put in place on top of the minimum loan program guidelines.  Even though lenders have the right to enforce these policies it causes headaches for borrowers who don’t live up to their standards.  This is why working with Mortgage Scenarios is essential as we know the 2017 FHA Credit Score Requirements and we will make sure you are qualified using only the minimum guidelines.

Key Credit Scores To Know

According to the 2017 FHA Loan Guidelines there are 3 different credit scores that will determine if you can qualify for an FHA Loan and what type of loan this will be.

  1. If you have a FICO score of 580 or greater you can obtain the lowest down payment FHA Loan which only requires a 3.5% down payment.  If your FICO score falls between 580 – 619 this will require a maximum debt to income (DTI) ratio of only 43% if you are going to get approved.  The 43% ratio means that your monthly debts including your new mortgage payment can only be 43% or less of your monthly Gross Income.
  2. If have a FICO score of 620+ you will still be able to obtain the 3.5% down payment FHA Loan but given the high FICO score you are able to have a DTI ratio of 56.9% which will allow you 13.9% more monthly debt and still get you approved for a home loan.  This is a scenario where having a few extra points on your FICO score can go a long way.
  3. If your FICO score comes in from 500-579 there is still some hope out there as you will be able to obtain a loan albeit with stricter restrictions.  In order to get an FHA Loan you will need at least 10% down payment and additional compensating factors to get your loan approved.  Compensating factors are additional financial strengths that can be used to offset your credit weakness. This can include a large down payment, cash reserves at closing, and minimal debt besides your upcoming mortgage.

Choose The Right Lender

Here at Mortgage Scenarios we are 2017 FHA Loan Guidelines experts and know all the finite details associated with FHA Loans.  We are able to lend to the minimum guidelines and do not get held back by Lender Overlays.  If you want to work with a lender who can get your loan approved, we are here for you and will develop a custom plan to get you in that new house you desire.

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