May 5, 2014
A reader asks, “If a lender can want a higher credit score then FHA does, how do I find a lender that will work with me having a lower credit score? Mostly because if the lender is approved by FHA but don’t have to go by their guidelines doesn’t that make it that much more difficult for a low credit score individual to get a loan?”
This question raises an important issue all FHA loan applicants should be aware of–FHA credit score minimums are just that. They are minimum requirements that lenders use as a benchmark, but the lender is free to require a higher credit score as long as that requirement is applied fairly and in accordance with federal Fair Housing Act laws.
Let’s look at the FHA loan credit minimums as published by the FHA and HUD in HUD 4155.1:
As we can see from that table, a borrower who has a FICO score above 500 is technically eligible to apply for an FHA mortgage loan. However, many lenders won’t approve a loan application unless the credit score is about 620 or higher.
The only way to find a lender willing to work with you and your current credit score, as referenced in the reader’s question, is to shop around for a lender who will work with you.
Borrowers who need help improving credit scores or making themselves more attractive to the lender as a credit risk should contact the FHA directly by calling 1-800 CALL FHA and ask for a referral to an FHA/HUD approved housing counselor.
The counselor may be able to offer advice on preparing for an FHA loan and getting properly prepared for the application.
Do you have questions about FHA home loans? Ask us in the comments section. You can get information about applying or getting pre-approved for an FHA loan at FHA.com, a private company and not a government website.
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 www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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