You need a FICO score of at least 580 to qualify for an FHA loan with a 3.5 percent down payment, according to the U.S. Department of Housing and Urban Development. If you can put 10 percent down, however, you can qualify for an FHA loan with a lower score. In some cases, borrowers qualify even though they have little credit history, and victims of disasters also qualify for special loans.
FICO Scores of 580 and Above
With a FICO score of 580 or higher, you can finance 96.5 percent of the home value. The down payment of 3.5 percent can come from a gift from relatives, savings or government assistance, according to Zillow. In addition, nearly all FHA loans require mortgage insurance, including monthly premiums and an up-front payment that can be financed.
FICO Scores Below 580
With a FICO score from 500 to 579, you can qualify for an FHA loan for 90 percent of the home's value. You must put a minimum of 10 percent down from your own savings, government grants or gifts. With a score below 500, you normally can't qualify.
If you're a victim of a major disaster and need a loan to replace or rebuild you home, you can qualify for a Section 203(h) FHA loan with a FICO score as low as 500. You must apply within a year of the time the President declared the location a disaster area. Loans of up to 100 percent loans are available, and mortgage insurance is required.
Lenders can qualify you for an FHA loan with a FICO score below 500 in special circumstances, such as insufficient credit history. In this case, lenders rely on other factors, such as your employment history and record of paying rent on time.
Making the Grade
Even if you meet the minimum FICO requirement, lenders won't necessarily approve you for an FHA loan automatically.
Additional FHA and Lender Requirements
Your credit score isn't the only requirement to qualify for an FHA loan even if it's high enough for the particular lender.
- You must be buying the home as your primary residence and must be a legal resident of the United States.
- The mortgage payment plus related expenses must typically be less than 31 percent of your annual gross income, according to Zillow. For example, related expenses include mortgage insurance, taxes and homeowner's insurance.
- Your total debt obligation each month including the mortgage should typically be less than 43 percent of your gross income.
- Lenders are allowed to approve higher percentages of housing costs or debt if there are compensating factors.
In most cases, you must be at least two years out of bankruptcy or three years out of foreclosure to get an FHA loan. You must also have rebuilt your credit.
- U.S. Department of Housing and Urban Development: Mortagee Letter 10-29
- U.S. Department of Housing and Urban Development: FHA Announces Policy Changes
- Zillow Complete Guide to FHA Loans and Mortgages
- Bankrate: Mortgage Possible With Credit Problems
- CNN Money: Secrets to Getting a Mortgage With So-So Credit
- U.S. Department of Housing and Urban Development: Mortgage Insurance for Disaster Victims Section 203(h)