Minimum FICO Credit Score for FHA Home Mortgage Loan

By | May 7, 2018

What is the Minimum FICO Credit Score for FHA Home Mortgage Loan?

1. Introduction:

Everyone has a dream to have a house of his own. But for majority of them need to plan finance to buy a home and mostly need to mortgage a loan. And one also needs to get home mortgage from a trusted finance provider. FHA is the one reliable agency of the Department of Housing and Urban Development. It provides home mortgage to borrowers with limited cash for down payments and having low or middle income. FICO has some specific criteria and has adopted FICO score and requires minimum score to be qualified for FHA loan guarantee.

2. Features:

Minimum FICO Credit Score for FHA Home Mortgage Loan

Required Credit Score for FHA Home Mortgage Loan

In order to improve the FHA mortgage loan process or modernize its loan program as well to fix loopholes if any, FHA makes changes in legislation and requirements of minimum FICO credit score from time to time. As a part of it, there has been change in the legislation and lending requirements. It has issued new guidelines which is effective from September 3, 2010. FHA requires minimum FICO score of 580. Applicants having score below 500 are not eligible whereas applicants with the score between 500 and 579 are limited to 90% LTV. You also need to fulfil some other requirements. There should be no foreclosure within the previous three years. It is strongly emphasised that there is no any past credit problem pending.

The agency even considers cases for someone who had to declare bankruptcy, but has valid reasons for it and has done good efforts to build the credit. FHA does not accept late payment for more than 30 days on rent or mortgage payments. It also requires that a person does not have more than one to two payments revolving credit. It is also needed that a person does not have more than 60 days past due within the time period of past two years.It does not make allowances for loan applicants who have bad credit history. However, you can improve your credit history and even can get credit counselling and home loan counselling from FHA.

3. Function:

You shouldn’t get disappointed looking at the 580 credit score. There some specific steps you can take and you can raise your credit score. First thing is you making your bill payments on time. You need to reduce your total debt for your credit and other unsecured debit. You can request lenders to reduce your credit card limits. These two factors will amount to the 65% to 75% of your credit score. When you are certain of your credit score, apply for the loan. Don’t apply for more than two to three times a year.

4. Considerations:

There are some of the things you should keep in considerations that can act as credit killers. You avoid tax liens or any bill going to court or collection agency. You shouldn’t be a defaulter on any debt specifically a student loan as it will never come off your credit history. If you are having a bad credit, start planning for it and get the score within two to four years. If you need to make any down payment, then start saving for it regularly.

Makea plan, get good credit score, apply for a home loan to FHA, get it approved and has a dream of house gets fulfilled.

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