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FHA loans may be particularly appealing to first-time home buyers who have a young credit history as well as people with more experience but a few credit blemishes. Part of the attraction can be attributed to the more lenient credit requirements associated with an FHA loan.

This blog post will go over what you need to know if you’re considering an FHA loan to buy or refinance a home.

Credit Score Required To Buy A House

Before we get into the credit requirements for FHA loans, it’s useful to take a step back and look at credit requirements in order to get a feel for credit dynamics in the mortgage industry.

For a standard conventional loan backed by Fannie Mae or Freddie Mac, you need a median FICO® Score of at least 620. It’s important to remember that there are three major credit bureaus who play a role in this process: Equifax®, Experian™ and TransUnion®.

Notice that I said “median score.” If there’s more than one person on the loan, it’s the lowest median credit score that counts. For example, if you have scores of 720, 690 and 650 while your significant other has scores of 660, 630 and 610, the score that counts will be 630.

The USDA doesn’t set a minimum credit score requirement, but lenders can set their own policies. For those looking to live in qualifying areas, the median FICO®Score required by Quicken Loans is 640.

Similarly, the VA has no minimum credit score policy in place. Again, it’s up to the lender. The median score required by Quicken Loans for a VA loan is 620.

Beyond simple qualification, your median FICO®Score plays a major role along with your down payment in the interest rate you receive. The higher your score and the higher your down payment, the better interest rate you can expect.

Minimum Credit Score Required For An FHA Loan

Technically you can get approved for an FHA loan with a median FICO® score of as low as 500, but there are some serious drawbacks to an FHA loan with a score that low.

The first is that you’ll need a down payment of at least 10%. Secondly, when qualifying with a score that low, it’s considered a subprime loan. What that means from a practical perspective is that even if you can get the loan, you won’t get the best terms and could end up with a much higher rate.

Finally, you have to have some very low qualifying ratios. In order to qualify with a median FICO® Score of below 580, you need to pay close attention to two ratios: your housing expense ratio and your overall debt-to-income ratio (DTI).

Your housing expense ratio is calculated as follows:

 DTI equation

The amount being spent monthly on housing expenses can’t exceed 31% of your gross income.

DTI takes into account all debts including your mortgage. That’s calculated with the following formula:

With a median FICO®Score below 580, your DTI can’t go over 45% of your gross monthly income. These two ratios have a major impact on how much house you can afford.

In addition to the restrictions laid out above, it’s important to note that very few lenders offer these subprime FHA loans. At Quicken Loans, you have to have a median FICO®Score of at least 580 in order to qualify.

The Benefits Of A Higher Credit Score

If you have a median FICO® Score of 580 or higher, the first benefit is that you’ll have more lenders competing for your business including Quicken Loans. Options mean better loan terms including more competitive interest rates.

Secondly, if your score is better than 580, you’ll only have to make a down payment of 3.5%. This could significantly open up your housing options. It’s worth noting that you’ll have mortgage insurance premiums for the life of the loan if you make an initial down payment of less than 10%. On the other hand, you’ll pay for mortgage insurance for 11 years with a down payment of 10% or more. However, one of the options you may have down the line in order to get rid of mortgage insurance is to refi into a conventional loan once you reach 20% equity.

If you have a FICO® Score of 580 but below 620, you’ll need to maintain a housing expense ratio of no more than 38% of your gross income and a DTI of no more than 45% in order to get an FHA loan through Quicken Loans.

If you have a median FICO® Score of 620 or better, higher DTIs are allowed than what otherwise might be allowed on many other loans. While there’s no hard maximum that applies to everyone, the DTI for borrowers with higher credit scores is based on your credit score range as well as the size of your down payment, among other factors. In no event will the FHA approve a DTI above 57%, but this could offer more budget flexibility than many other mortgage options.

FHA Credit Score Requirements May Vary

The credit scores and qualifying ratios we’ve mentioned in this post so far are either the minimums required by Quicken Loans or the FHA itself. Other lenders may have their own requirements including, but not limited to, higher FICO® Scores or a larger down payment.

In any case, we encourage you to shop around for the best loan terms and make sure you’re comfortable before moving forward.

Can You Get An FHA Loan With No Credit History?

If you’re applying for any kind of mortgage, including FHA, it’s a good idea to have at least two or three accounts open and reporting on your credit whether those are revolving accounts like credit cards or monthly loan payments. However, it’s possible to get an FHA loan with a thin or nonexistent traditional credit history. Before moving forward, there are some things you should know.

These loans are manually underwritten, and that means your mortgage process can take longer. In order to get an FHA loan with no credit history from Quicken Loans, you need to have a minimum of three nontraditional credit references. Those references have to include at least one of the following:

  • Utilities not reporting on the credit report (gas, electricity, water, cable or internet)
  • Telephone service
  • Rental housing payments

The other two references may come from any of the following:

  • Insurance premium that’s not payroll deducted (Medical, Auto, Life and Homeowners/Renters)
  • Child care payments
  • School tuition
  • Retail store credit cards (department, furniture, appliance, etc.)
  • Rent-to-own (furniture, appliances, etc.)
  • Portion of medical bills not covered by insurance
  • Car leases
  • Personal loans from an individual with repayment terms in writing that can be supported by cancelled checks
  • You can show a documented 12-month history of savings by regular deposits resulting in an increasing balance to the account. The account has to show at least quarterly deposits which aren’t payroll deducted. There should be no fees for nonsufficient funds.
  • You can also document a year’s worth of payments you made to an account on which you’re an authorized user. 

Finally, because you have no credit history, you’ll have to keep your DTI low. Quicken Loans requires a housing expense ratio no higher than 31% and a total DTI of less than or equal to 43%.

Learn More About FHA Loans

For more on FHA loans including the advantages of the FHA option and how it works, we invite you to check out this page on FHA loans.

If you’d like to see how FHA or another mortgage option could work for you, you can apply online with Rocket Mortgage® by Quicken Loans or give one of our Home Loan Experts a call at (800) 785-4788.

 

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This Post Has 405 Comments

  1. I’m sorry if this is long winded! I need advice.
    There is a lot that I would like to have a home built on. All in all it’s 2 acres with a 1470 sqft home. It will range between 155-170k. My Credit Karma score says 645 Transunion but myFico says it is 593. I’m not sure what would be accurate (if any). I just paid off my accounts to zero but it hasn’t updated on my report yet. I also have three late payments in the past year which were the only three I’ve ever had (I went overseas). I filed disputes for those three already and waiting to hear back. That leaves my only debt my car payment! Woohoo! I want to wait until my score reflects the changes but I’m worried I will lose the lot as it’s the last one. Is there a way to reserve it? What can I do and is it worth it to risk getting a mortgage with that high of an interest rate/ding my credit if I know it will improve in the next couple of months? Any advice would be greatly appreciated.

    1. Hi Sarah:

      Unfortunately, we don’t do loans for lots. These questions may be best directed at another lender. We don’t want to waste your time, so I hope this helped!

      Thanks,
      Kevin Graham

  2. This soo not true i applied for a loan, my credit score is 592 and my husbands 617 we have good steady jobs and make a descent amount of money yearly. Our loan was for 70000 yet we were denied. So its not true about having your score at 580 or above u can qualify bs cuz its not true

    1. Hi Yesmeida:

      I’m sorry for your experience with us. I can tell you that every situation is different. I’m going to have someone reach out to you to discuss this. They’ll be in contact.

      Thanks,
      Kevin Graham

  3. My husband & I are trying to get a mortgage for around $100,000. His score was 616. Having trouble cause he had a repo last year. We were trying for no money down.

    1. Hi Debbie:

      You can only get a no money down loan through the VA and those are only available to active-duty military, veterans and surviving spouses. We may have some low down payment options available including a 3% option if he bumps his credit score up a little bit. I’m going to have someone reach out to go over this with you.

      Thanks,
      Kevin Graham

  4. My middle credit score is 591 will I be eligible for a 150k-190k FHA loan and how high will the interest rate be?

    1. Hi Paloma:

      If you’re correct about your middle credit score, your credit is fine, but there are many other factors that go into loan qualification and what kind of interest rate you would get. I’m going to have someone reach out who can look into your personal financial profile and see about your options.

      Thanks,
      Kevin Graham

  5. Do you guys do fha 203k loans? If so what does your credit score have to be? We already are pre approved through another lender for a fha loan but we found a house we want but need a fha 203k loan and they are saying our credit score has to be at least a 660 to get that type of loan

    1. Hi Savannah:

      Unfortunately, we don’t do FHA 203K loans. However, I wish you good luck.

      Thanks,
      Kevin Graham

  6. Hi! I’ve already been in contact with Quicken and probably should really talk to someone. The reason that I haven’t is because I’m very unsure if I will be able to access the type of loan I need. Here is my situation:

    My gross monthly income is $4165, monthly debt payments $1400 and my FICO 628. I have never purchased a home and because I don’t want a high mortgage payment I was looking into buying a mobile home in a park that is priced at $44900. Since I recently purchased a newer vehicle (just this last month, it’s not even showing on my CBR yet) I don’t want yet another string of new hard inquiries on me (they did 6 inquiries that I know of), I should wait until some of those fall off, correct? And in the meantime work on getting my DTI lower? Does anyone know of any mobile home lenders (preferably FHA) that will work with me, because I’m still not clear on whether Quicken will even do such a loan.

    Thank you in advance

    1. Hi Dechee:

      Unfortunately, we don’t do loans on mobile homes. In terms of finding a lender that will do them, if I were you, I might try Google.

      In terms of your credit, it might take a while for those inquiries to fall off. Lenders are more concerned that you’re not trying to apply for too much credit at once, but as long as there’s a gap, you should be okay.

      Thanks,
      Kevin Graham

  7. I’m in the process of selling my home (we purchased with cash) and interested in using the amount from the sale of this property to purchase another home – the homes in another state are slightly more expensive so I may need to think of trying to get a loan. The problem is my credit is awful with a score of 560. Everything on my report is a few years old. I have only $1500 in collections but around $10,000 on car loans that were charged off. I’ll be using some of the money from the sale of the home to bring my score up, however, I am wondering if I could get a mortgage with bad credit by paying down half of the loan. Are lenders more willing to approve with more down?

    1. Hi Barb:

      Our minimum credit score is 580. You’re very close so if you use some money from the sale to pay down the debt, you could end up in good shape. I’m going to forward your comment to one of our Home Loan Experts to see if they have any further advice.

      Thanks,
      Kevin Graham

    1. Hi Daryl:

      I’m going to have someone reach out to you and help you look into your options. They’ll be in contact.

      Thanks,
      Kevin Graham

  8. I would like to purchase a home, I make 32,000 a year, and have no dependents. I need to bring my score up a little as well. Is there anyone there that can help me do this, where I can be able to buy before the end of the year?

    1. Every situation is different. Someone will be reaching out so we can look into your personal financial profile and see what we can do for you. Thanks for reaching out!

      Kevin Graham

  9. Good morning, we currently live Fl. We are looking to purchase a home this year. However, this would be my first home but my husband has a home in Atlanta. Our credits scores are around 630. Can we both apply for FHA loan?

    1. Hi Bea:

      You can definitely apply for an FHA loan, but if you’re right about your credit score, you might have some other options open to you. I’m going to have a Home Loan Expert reach out to help determine the best option for you.

      Thanks,
      Kevin Graham

  10. full of bull prob won’t post this either, need credit score of 620 or higher before will talk to you, doesn’t matter never had credit “Sometimes we are able to offer financing if you have a credit score below 620, but we will only do that if you have an accepted offer on a home. The reason is because it is often very tricky to make a loan work with anything below 620. Instead we refer you to our credit team to help you work on your credit to bring it above 620. This makes the whole process much easier for you.”

    1. Hi Cher:

      We never want to hear our clients feel this way. We apologize for your poor experience and want to try and see if we can turn this around for you. Thanks for reaching out and someone will be in contact with you.

      Kevin Graham

    2. This is so true. Same thing happened to me I had a 617 when I applied they had me speak to someone in credit team I brought my score up to 626 by paying half of a credit card bill and still was unable to get a home loan even with my score being over 620. Then was told I need a 640 credit score it was a waste of my time and a hard inquiry on my credit!

      1. Hi Ashley:

        We’re sorry to hear you had a poor experience with us. We’re actively researching your situation and someone will be reaching out. Thanks for making us aware of this.

        Kevin Graham

    1. Hi Daniella:

      Every situation is different, but we can certainly help you look into your options. Someone will be reaching out.

      Thanks,
      Kevin Graham

  11. Hi,

    I have a credit score of 590 and am interested in purchasing a home. Is this realistic with an FHA loan?

    Thank you,

    Kris

    1. Hi Kris:

      As long as you credit stays intact that is realistic. I’m going to pass your information along to a Home Loan Expert so you can get started.

      Thanks,
      Kevin Graham

  12. I have 3 vantage scores 592 596 and 602 want to purchase a home max 69995. By owner use to be thru real estate but now he’s selling on his own. I have one job been there for 3 years in June and get tips don’t claim all of them 1339 gross month not with all my tips. I started another job working from home started in Nov get paI’d from that once a month this will b my third month of pay stub last month 900 plus gross Jan will be 1000 plus I am head of household and get a 10000 return back every year. I have bankruptcy 3 and half years ago and student loans deferred but my payment would b 546.10 a month no outstanding debt money in bank any loan do u think I could b approved for

    1. Hi Jeanette:

      There are several different questions there. I’m going to pass you along to a Home Loan Expert who can give you some answers.

      Thanks,
      Kevin Graham

    1. Hi Danielle:

      We would absolutely love to give you some information. A Home Loan Expert will be reaching out.

      Thanks,
      Kevin Graham

  13. My wife and i are looking to get a mortgage by june. It will be our first home. We pay $1100 in rent now. My credit is the problem with my score being just over 600 and hers is around 690. Is it possible for us to get a mortgage?

    Thank you

    1. Hi Andrew:

      When couples apply for a home together, mortgage lenders take all of the available credit scores for each person from the three credit bureaus – Equifax, Experian and TransUnion. Once a person’s personal credit score has been averaged out, it’s averaged again with the credit score of the other person on the loan. Assuming the credit scores from the bureaus are all around what you think they are above, you could potentially have several loan options including both FHA and conventional mortgages. It’s just important to note in these situations that there are actually three sources measuring your credit score. I’m also going to give you a link to a blog post on building up your credit that you may find helpful.

      Thanks,
      Kevin Graham

  14. Hi,
    Our situation is a little complicated because of my husband’s back child support but I was told if he can prove payments that FHA could approve him?
    The loan would be in his name only. He makes all the money and I freelance for the last year so it is impossible to document. He makes about $45K a year. We would not mind a two family for extra income.
    My credit is not issue, it is too ugly to look at but since this is his loan, I also worry about the arrears payment being too high for LTV and DTI. He also has a car payment. His mid score is 581 but that could go up with paying down his credit card after the holiday. We will be saving for the the down payment the next few months. We are looking at a home between $80K and $50K. Really not that large of a loan but to us, a home is a miracle and to not pay someone else’s mortgage. We pay $750 now so you get the picture. Thanks, Kim

    1. Hi Kim:

      Every situation is different, but I’m going to have someone reach out and see if we can look into your personal financial profile further to find out what options you might have.

      Thanks,
      Kevin Graham

  15. Hi, I make around 18,000 per year single mom of five. With additional income it rounds up to about 26,000. My credit score is about 615 is it possible to get at least 70,000 mortgage loan. Might I add I have a nice return from taxes each year. I know I can afford it. After all I pay $850 for rent.

    1. Hi Nicole:

      We would be happy to have a Home Loan Expert reach out to you tomorrow and look into what options might be available for you. Enjoy the rest of your Sunday!

      Thanks,
      Kevin Graham

  16. Hi I’m wondering how long your credit history needs to be in order to obtain the fha loan. My husband and I are first time home buyers but we are running into the issue that we have done everything with cash up until 6 months ago. We keep running into this issue.

    1. Hi Casey-

      The amount of time you need to have an open credit history depends on your situation. I’m going to have someone reach out to you about this. Have a good day!

      Thanks,
      Kevin Graham

    1. Good morning, Dokas! We can certainly look into your situation. I’m going to have a home loan expert reach out to you with an email. Have a nice Monday!

        1. Hi Naimah:

          I can help you with that. I’m going to pass your come along to a Home Loan Expert so we can gather some more information and look into your options. Have a great day!

          Thanks,
          Kevin Graham

  17. Hello, I’m interested in getting a home loan possibly through rehabbed and ready from Detroit land bank. Do you all extend mortgages for fico around 600?

    1. Sure thing, Alicia. I’m going to pass your message to the right people, and they’ll reach out to you with an email.

  18. Hi.
    I have a credit score of 642, 632 and 622. I own the house that I live and and the car that I drive. I will make close to 100,000 this year. I have been at my job 11 years. Can I qualify for a loan for 130, 000?

    1. Hey, Kenney! First of all, congrats on having your home and your car paid off. That is quite an accomplishment! There are a few more factors that need to be considered before we can give you an answer (debt-to-income ratio, value of assets, etc), so I’m going to have a home loan expert reach out to you. They’ll help you get started! Have a nice Thursday!

  19. I have a credit score of 580, I own my home with no mortgage. However, I’m in back taxes. Can I get an equity loan to pay back taxes and get $10000 for repairs on home? I have long term employment history as well. Who do I reach out to for help?

    1. Good morning, Sue. I’m sorry, but Quicken Loans does not currently offer equity loans. You might look at obtaining a personal loan, though. This would be a higher-interest loan than a mortgage, but it will give you some time to get the necessary funds in order. Best of luck in your situation!

  20. Hi –
    My husband and I are looking to purchase our first home together. I am a first time home buyer. I’ve been building my credit score over the past several years. I got it to almost a 700 and once I paid off my car it dropped 82 points. We are in desperate need of something bigger. We pay $765 in rent and we both work full time. Can someone help us?

    1. Good morning, Amanda. I’m going to have a home loan expert reach out to you about some options. Your credit score is affected by the types of credit currently being used (student loans, credit cards, car loans, etc.). So yes, when you paid off your car, it hurt your credit score. But frankly, car loans are high-interest debt, meaning (in the long run) it makes more sense to get rid of them. There are better ways to build credit. Here’s a handy article about pumping up your credit score. It doesn’t fit your situation perfectly, but it will give you a good starting point.

      Be expecting an email from one of our experts. They’ll dive into your situation and give you some tips.

      Have a nice weekend, Amanda!

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