FHA loan credit score requirements

What credit score do you need for an FHA loan?

When you are looking to buy or refinance a home with a Federal Housing Administration (FHA) loan, it is important to know your credit score. Your credit score helps lenders like Freedom Mortgage understand how you manage your finances, and it affects the interest rate we may be able to offer you.

At Freedom Mortgage, our current minimum FHA loan credit scores depend on whether you want to buy a home or refinance a home.

• When you want to buy a home with an FHA loan, we can often accept a minimum credit score as low as 550.
• When you want to refinance and get cash from your home's equity with an FHA loan, we can often accept a minimum credit score as low as 550.
• When you want to refinance a home with an FHA streamline refinance loan, no credit inquiry is required in most cases*. We offer FHA streamline refinances for individuals with existing FHA loans.

Note that your credit score is just one of the measures we use to decide whether you meet the requirements for an FHA loan. You need to meet credit, income, and financial criteria to get approved for a mortgage.

Your chances of getting approved for an FHA loan are better if you have a higher credit score. But you can still get approved for an FHA loan with a lower credit score and you may qualify even if you have a bankruptcy or foreclosure.

FHA credit score requirements and down payments

Another advantage of FHA loans is their low down payment requirements. If your credit score is 580 or higher, you can often make a down payment as low as 3.5% when you get an FHA loan. Other FHA loan requirements include:

• Debt-to-income ratio. Lenders frequently want your debt-to-income ratio to be less than 43%. This means that your total debt should not exceed 43% of your monthly income.
• Proof of income. While there are no minimum income requirements, you will need to document that you have income sufficient to pay your monthly mortgage bills.
• Loan limits. The Federal Housing Administration limits the amount of money you can borrow with an FHA loan to finance a house.
• Mortgage insurance. You will need to pay an upfront mortgage insurance premium of 1.75% of the purchase price of the house. This upfront premium can often be rolled into the total loan amount. In addition, you will need to pay annual mortgage insurance premiums ("MIP") that typically cost between 0.40% and .75% of the loan amount. If your down payment is less than 10%, the annual MIP will last for the life of the loan.

Freedom Mortgage is a top FHA lender in the United States according to Inside Mortgage Finance, 2023.

* A credit pull would be required if an existing obligor is being removed for reasons other than death or divorce.

Last reviewed and updated February 2024 by Freedom Mortgage.