August 13, 2020

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The Difference Between FHA Loan Credit Score Requirements And Your Lender’s FICO Score Rules

The Difference Between FHA Loan Credit Score Requirements And Your Lender's FICO Score Rules

We answer many reader questions about FHA home loans, including information about credit requirements, appraisal issues, and FHA loan standards.

Among the most common reader questions about FHA home loans? Questions about the credit scores required to get home loan approval.

This issue is confusing to some borrowers because they don’t realize that FHA loan rules say one thing and lender requirements may say another. Is this a contradiction?

No. The FHA loan credit score requirements should be viewed by the borrower as the minimum standard, with the knowledge that the lender is permitted to require higher FICO scores than the FHA’s minimums but NOT permitted to require LOWER scores than the FHA minimum.

In other words, consider the FHA loan FICO score numbers as the baseline lowest scores permitted. The lender is free to require a higher score than the bare minimum. This is a typical part of doing business with FHA loans.

The FHA Loan Program Rules For FICO Scores

The FHA home loan minimum credit score for home loan approval is technically 500. Borrowers with FICO scores between 500 and 579 are technically eligible for an FHA mortgage but the down payment will NOT be the lowest available, it will be 10%.

However, FHA borrowers need to remember that the lender’s FICO score requirements will be far above 500 in most cases and if you are in the 500-579 credit score range you should seriously consider working on your credit by paying all bills on time, ever time for at least a year before attempting to apply for a home loan.

The on-time bill payment issue is not the only thing borrowers need to do to raise their credit score; you will need to lower your balances below 50% (at a minimum, lower percentages are far better) of the credit limit and refrain from opening new credit accounts ahead of the home loan application.

The FHA loan program rules also state that borrowers with FICO scores at 580 or better are eligible for maximum financing with a 3.5% down payment required. However, you may find that many lenders want FICO scores in the mid-600s for such terms.

Not all lenders offer the same terms and conditions and it pays to shop aggressively for a lender who will provide you the most favorable interest rates, down payment options, etc.

Never assume you do not qualify for a home loan-talk to a participating FHA lender and see what your options are to qualify for a home loan. Remember that all home loans require you to negotiate the interest rate and other terms with the lender, and if you don’t shop around you may cheat yourself out of a better deal.

Joe Wallace - Staff Writer

By Joe Wallace

July 8, 2019

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for for (8) years and is currently the Associate Editor for

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About was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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