April 21, 2024

FHA Increases Minimum Credit Score Requirement

FHA And VA Increase Credit Score Requirement

Effective March 6, 2009, a minimum credit score of 620 will be required to be eligible for FHA and VA loans.

The credit score requirement had recently been changed less than a month ago.  As of February 9, 2009 the credit guidelines had required only a minimum credit score of 580, subject to certain exceptions.

The increased credit score requirement is an attempt to lower the large number of FHA defaults, which have been running at about 12%.  A 580 credit score reflects a sub prime borrower and in conjunction with minimal down payment requirements, the risk of mortgage default is very high, as reflected in the FHA default ratios.

New Home Buyers With Empty Pockets After Closing

Another area that should be examined by the FHA in their underwriting guidelines is the amount of reserves that a borrower has after closing on a home purchase.  Many borrowers are left with empty pockets after paying for closing costs and the down payment to purchase a home.  As every homeowner knows, the expenses of maintaining a home are never ending.  In addition, a major and unexpected repair could be thousands of dollars that can put a severe strain on the family budget, leading to the inability to maintain the mortgage payments.

There are no guidelines per se that require a potential home buyer to have a specific amount of savings available after purchasing a home.   The ability to save should be viewed by the FHA as a prerequisite for home ownership.  Additional mortgage defaults do not benefit the FHA nor the homeowner.  Savings (reserves) of 3 to 6 months of mortgage payments should be considered by the FHA as a part of their underwriting guidelines.  Buyers might have to postpone the purchase of a home to acccumulate some savings and strengthen their financial position, but the end results would benefit all – a stable housing market with fewer defaults.

Update Regarding 620 FICO Score Requirement – April 2009

There are now some lenders that will do FHA loans at sub 620 FICO scores – see Sub 620 FICO Score Lenders

Update on This Topic: 

-See FHA Introduces New Minimum 580 Credit Score Requirement, September 6, 2010

-See FHA Zero Down Payment Financing Returns


  1. Dan Aubuchon says

    Please note that FHA DOES NOT have a minimum credit score, this 620 you speak of is not correct. Many wholesalers have placed their own internal score requirements (of which 620 is the typical minimum) BUT FHA has not implemented a minimum score as of yet. There is talk of a 560 FHA minimum unless borrowers have 10% down but that is still not yet in place.

  2. Kevin Blake says

    Hi my name is Kevin Blake and I work for a Direct Lending Bank and we go down to a 580 credit score for Purchases and Refinancing. If anyone is interested we are licensed in 40 states and all i need is 5 minutes of your time. please call me toll free at 1-877-733-4432 Ext. 686 Thank you

  3. We have many lenders that we can refer to you. All have worked out great with us. This is for the Los Angeles area. You can contact me at http://www.BedrockEstates.com
    Good luck everybody!
    TJ Powers

  4. HUD has posted an advisory and YES, there are minimum FICO’s and/or down payment requirements…..

    “New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.”


  5. jean scott says

    I amseeking a refinance I already have a fha loan I was told by wyndahm mortgage co that score of 635 was not enough yhey reguire at least 660 who is right

  6. Tai Carson from New Jersey says

    are there any reputable lenders in New Jersey who can optain an FHA loan for a 613 FICO score? please help asap

  7. Bill Zielinski says

    The FHA now has a minimum credit score requirement of 580 for borrowers with less than 10% down per the HUD mortgagee letter. This has not changed. See FHA Introduces New Minimum 580 Credit Score Requirement, September 6, 2010 – click on link under “Update” at end of article.

    The confusion on FHA scores arises due to each individual letter using their own “credit overlays” which very often require higher scores than the FHA minimum. As noted in the article;

    The new credit requirements are not expected to dramatically change the number of FHA mortgage approvals. Most lenders had already imposed a minimum credit score requirement of 640 or higher for FHA borrowers. In limited cases, borrowers with scores between 620 and 639 could still obtain mortgage approval.

    Lenders are deathly afraid of costly buybacks on defaults and have enhanced their own credit requirements on FHA loans to reduce this risk. Due to the bank’s credit overlay enhancements, a borrower without at least a 640 credit score will have a very difficult time obtaining mortgage financing.

  8. We live in Florida and have 580 and above (on all three credit bureaus) and have hired attorney to raise the scores more) old accounts still showing and should have been removed. No debt. Already found home to buy. Looking for an FHA lender asap so we can obtain an approval letter. We have our down payment and only want to finance 15 year fixed with FHA. If you are a lender or know of one, please respond to this post or email me.


  9. we have a score 767 no debt , but my husband has been in prison and he only have a year and a half of employment is it posible to get approve on and fha loan?????

  10. I was wondering if I was able to qualify for a VA Mortgage with a credit score of 600 in the state of Texas please let me know what are my options

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