Apply
FHA Loan Credit Score Requirements

FHA Loan: Credit Score Requirements

The credit score requirement is the most-searched FHA question and the most misunderstood one. The published number is easy. What happens to a file at that number is where it gets complicated.

The published minimums

Credit Score Minimum Down Payment Eligible?
Below 500 N/A No
500 to 579 10% Yes, with lender that permits it
580 and above 3.5% Yes
Those are FHA’s rules from HUD Handbook 4000.1. FHA insures loans down to a 500 score. That’s the floor, and it’s lower than any other mainstream mortgage program.
01

What lenders actually do

Here’s the part most articles skip. FHA doesn’t lend money. Lenders do, and FHA insures the loan. Every lender gets to decide how much risk they’ll take above FHA’s floor, and most of them add their own minimums, called overlays.
A 580 overlay is common. Many lenders won’t touch a file below 580 at all, regardless of what FHA permits.
A 620 overlay is also common, especially at larger lenders and banks.
Lenders who write to FHA’s actual floor of 500 exist, but you have to find them, and they’ll want a lot more from the rest of the file to offset the score.
So the practical answer to “what credit score do I need” is: it depends which lender you ask. If your score is 560 and the first lender says no, that’s not FHA saying no. That’s one lender’s overlay. Ask the next one what their floor is before you fill out anything.
02

The score is not the whole picture

Two borrowers at 620 can be in completely different positions. FHA underwriting looks at the credit report, not just the score.
Recent late payments carry more weight than old ones. A 30-day late on a mortgage or rent in the last 12 months is a problem regardless of score. The same late payment three years ago is usually not.
Collections don’t have to be paid, but they affect your ratios. If non-medical collections total more than $2,000, the underwriter counts 5% of the balance as a monthly payment in your DTI unless you set up a payment plan. Medical collections are excluded entirely from that calculation.
Judgments and tax liens generally need to be paid or on a documented payment plan with at least a few months of history.
Disputed accounts on the report can force a file into manual underwriting, which brings stricter ratios. If you have disputes pending, resolve them before applying, not during.
Credit depth matters. A 640 with three open accounts and eight years of history is stronger than a 640 with one account opened last year. FHA allows non-traditional credit (rent, utilities, insurance paid on time) for borrowers with thin files, but it requires documentation.
03

Scores between 580 and 620: the gray zone

This is the range where lender choice matters most. FHA allows 3.5% down here. Many lenders don’t.
If you’re in this band, three things help:
  • Find a lender whose overlay is 580, not 620. Ask directly.
  • Bring reserves. Two to three months of housing payments in savings after closing makes an underwriter substantially more comfortable with a marginal score.
  • Keep the DTI conservative. A 590 score with a 38% back-end ratio is a much easier file than a 590 with 48%.
04

Scores below 580

Possible, with 10% down and a lender who writes to FHA’s floor. Expect the file to be manually underwritten, which means the standard 31/43 DTI limits apply with little room above them, and you’ll need documented compensating factors.
Honest advice from someone who’s underwritten these: if you’re at 540 and could reasonably be at 590 in six months by paying down a couple of balances, the six months are usually worth it. Not because the loan is impossible at 540, but because the terms and the lender options open up considerably above 580.
05

What I'd tell a borrower on the phone

Most people asking this question have a specific score in mind and want to know if it works. The answer is almost always “probably, with the right lender, depending on what else is in the file.” That’s not a dodge. It’s how FHA is built.
The score gets you in the door. The rest of the file gets you approved.

Frequently asked questions

FICO. Specifically, lenders pull a tri-merge report and use the middle of your three scores. If there are two borrowers, the lower middle score is the one that counts.

FHA permits it with 10% down. Finding a lender who will do it is the hard part. Most won't.

A mortgage inquiry has a small, temporary effect. Multiple mortgage inquiries within a short window (typically 14 to 45 days depending on the scoring model) are counted as one.

Yes. The lower of the two borrowers' middle scores is the qualifying score for the file.

Buying outside Colorado or Texas? Barrett Financial Group originates in 48 states. Get in touch and I’ll connect you with a licensed originator in yours.
Back to FHA Loan Requirements

Ready to Get Started with Your FHA Loan?

Take the next step with our easy and secure online loan application. Apply online, check your loan status, and complete your application tasks in one convenient place.
Apply