May 19, 2022

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Buying A Home: Credit Questions And More

Bad Credit Home Loans

There are plenty of questions first-time buyers ask about home loans and the credit requirements you need to get the best deal on your FHA mortgage. Here are some common questions you should know the answers to:

I Have Multiple Credit Scores. Which One Gets Used?

One of the more potentially confusing things to a new borrower? FICO scores. Most consumers will have three FICO scores, they may not match, and the lender may choose your middle score as “the one”. In cases where you only have two FICO scores, the lower one may be used.

If you worry about FICO scores, be sure to take early steps to raise the score before applying for the loan. Start as early as possible and work on raising your scores by paying on time, every time. You can also work on lowering your credit card balances and reducing your overall debt.

Do I Need A High Credit Score To Qualify For An FHA Mortgage?

The shortest answer is “no.” FHA loan credit standards are more forgiving than some conventional options.

FHA loan standards state that those with FICO score 580 or higher qualify for the lowest downpayment but remember that a lender may have FICO score requirements higher than that number.

Perfect credit is not required but you will need to consider waiting to apply for your home loan until you have 12 months or more of on-time payments with no late or missed payments on your financial obligations each month.

You’ll want to show the lender a history of responsible credit use with balances that are far from hitting your credit card limit, and you’ll want to apply having a solid employment history (two years or more though not necessarily with the same employer).

When Does My Lender Check My Credit Reports?

Your lender will check your credit when you apply for the loan, but the lender is also free to pull another copy of your credit report at any time before closing day. 

Don’t assume you are free to apply for new credit once you have applied for the mortgage loan.

Always wait until after closing if you need to apply for new credit; the same is true when having a payment issue with an existing debt–if you begin to miss payments before closing day, you could affect your chances to close the deal.

Aren’t Most Lenders Offering The Same Things For My FHA Loan?

Not necessarily. Some lenders may price their mortgages differently or offer you better terms than others. Even if you decide to keep your current lender and buy a home with the bank you know, it pays to shop around and compare rates/terms, etc. You’ll be glad you made an informed purchase.

In short, it pays to shop around; you may be able to bring compensating factors to the bargaining table including making a higher down payment or having cash reserves your lender can use to approve your loan if other factors aren’t as ideal as you need them to be.

Each participating FHA lender has their own perks and options to choose from and it is wise to know who offers the best or most competitive terms.

Joe Wallace - Staff Writer

By Joe Wallace

January 12, 2022

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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