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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. My husband and I are looking to buy a house spring 2018. We both have pretty good credit and our only debt is my student loan (payments are current). The issue I’m worried about running into is that when we start looking, I will still be on maternity leave from my job, which means I will have no income, and my husband is self-employed. Does that totally disqualify us?

    1. Hi Lauren:

      You wouldn’t automatically be disqualified at all. Every situation is different. I’m going to recommend you speak with one of our Home Loan Experts to go over your situation and see what we can do for you. You can get in touch with them at (888) 980-6716. Hope this helps!

      Thanks,
      Kevin Graham

  2. Me and my husband are interested in purchasing our first home. my credit score is about 620 and his is around 590. If we got approved for an FHA loan would we be able to do down payment assistance or would be be required to pay the down payment?

    1. Hi Jessica:

      If your credit score is below 620, you have to contribute at least 3.5% to the down payment yourself. If you were to use your husband’s income to qualify, that would be the case. I’m going to recommend you check out our friends at QLCredit. You and your husband can pull your credit for free without affecting your scores and get personalized tips on how you can improve based on the information in the report. I’m also going to recommend you talk to one of our Home Loan Experts. They may be able to work with you to recommend strategies to you get your credit to where it needs to be and stay there. You can get in touch with them by calling (888) 980-6716. Hope this helps!

      Thanks,
      Kevin Graham

  3. I would like to purchase a condo. Per credit karma, my credit score is 690. However, when I tried applying for a mortgage loan, the credit union I applied with said my score was 617. Since I previously owed a home, I am not qualified for a FHA loan. I have a 20% down payment. Is there any hope in me getting approved for a loan?
    thanks!

    1. Hi Kristina:

      We can certainly look into your options. For starters, I’m not sure who told you that you couldn’t get an FHA loan if you previously owned a home. However, your score is close enough to 620 that you would probably benefit from considering a conventional loan to avoid mortgage insurance payments. It’s hard for me to tell you what your score would be if you applied with us because I don’t know which version of the credit bureau formulas they use. However, even if it’s a couple points short at the moment, we have people who can strategize with you and give you tips on how to get your score where it needs to be. I’m going to recommend you get started by speaking with one of our Home Loan Experts. You can get in touch with them by filling out this form or calling (888) 980-6716.

      Thanks,
      Kevin Graham

  4. I recently look at my credit score for all three

    Equifax is 587
    Transunion is 601
    Experian is 590
    There a way get first time buyer loan with low down payments or arrangements with my credit looking that or do i need to improve the 587 and 590 to get approved ???

    1. By the way : This is my first time ever really want to get house with loan i have never been homeowner i would very i like to obtain getting a house

      1. Hi Natasha:

        Based on your credit score, you may qualify for an FHA loan at this point. However, there are many factors that go into qualification. I’m going to recommend you talk to one of our Home Loan Experts to go over any potential options you may have. You can get in touch with them by filling out this form or calling (888) 980-6716. Hope this helps!

        Thanks,
        Kevin Graham

  5. I live in Minnesota and I would like to purchase a duplex to be owner occupied. My credit scores are 626, 534, and 587. The big range in my score is due to me filing chapter 7 bankruptcy that will fall of my credit report in September 2017. I was able to get it removed from my transunion report early. I am currently renting and my lease expires 7/31/17 and would love to purchase instead of renewing if at all possible. I make roughly $61,0000 a year.

    1. Hi Theresa:

      The soonest we could help you with a loan is one year after your bankruptcy is completely dismissed or discharged. If it’s going to fall off your credit report soon, it sounds like that may be the case. We can help you look into your options. I’m going to recommend you speak with one of our Home Loan Experts by calling (888) 980-6716. Have a great day!

      Thanks,
      Kevin Graham

  6. Currently in negotiations with a local mortgage company in Charleston, SC. Have credit scores ranging from 582-639. My middle score is only 602 currently. I believe that many companies require a middle score of 620, is this true with Quicken Loans as well? If my middle score is under 620 can I still get a loan from Quicken? Make 70k/yr and DTI is 32%

    1. Hi David:

      It depends on the type of loan you’re getting. If it’s a conventional loan, we’re looking for a middle score of 620, but with FHA you can get a loan with a score as low as 580. I have to say that sounds like quite a bit of variation between scores. One of the things you could do is take a look at your credit report to make sure it’s accurate. You can get your Equifax credit report and score for free from QLCredit without affecting your score. It also give you tips on how to improve your score.

      After you’ve verified that everything looks accurate, we would absolutely be happy to talk to you about your home loan options. You can get in touch with us by filling out this form or calling (888) 980-6716. Hope this helps!

      Thanks,
      Kevin Graham

  7. can i be approved with a 600-630 credit score? earn 27000 a year. want a FHA for a low downpayment on 120,000$ home in Oakland,TN. what monthly payment could be agreed upon if any? FHA requested; time sensitive
    Thanks

    1. Depending on your actual credit score, you may qualify for a conventional loan with a down payment as low as 3%. You can check out your loan options online through Rocket Mortgage or give us a call at (888) 980-6716.

  8. My wife and I live in a rental right now and the landlord has no intentions of renewal. We have 3 years on time payment history with the property (reported to Credit Bueraus through rentreporters.com) I have been at the same job for 8 years, and two PT jobs for 2 years each. I am in the process of paying off credit cards and am moving to a 590-600 on credit score for all three. Take home on income tax was 89k…….am I looking at a pipe dream of being approved in the next 3 months?

    1. Hi Mike:

      Every situation is different, but based on what you’re telling me, it sounds like you might qualify for an FHA loan at this point. I’m going to recommend you talk to one of our Home Loan Experts by filling out this form or calling (888) 980-6716. They can help you go over all of your options.

      Thanks,
      Kevin Graham

  9. I am looking to refinance my heloc loan but I had a bancruptcy 5 yrs ago. My loan was not reaffirmed. Can I find a lender to to help me

    1. Hi Elsa:

      Every situation is different but we can certainly look into your options. It doesn’t so much depend on when the bankruptcy was filed as when it was discharged or dismissed. I’m going to recommend you talk to one of our Home Loan Experts by filling out this form or calling 888-728-4702.

      Thanks,
      Kevin Graham

  10. Very misleading article. We tried to get a refinance fha loan with cashout from Quicken and got denied despite believing what the article said about a 580 credit score. Stop filling my mail with pre-approved offers that we don’t qualify for. You are deceiving and not trustworthy

    1. Hi Wendy:

      Many factors go into loan qualification other than your credit score. That said, I’m sorry you’ve had this experience with us and I’m going to get this to someone who can look in your situation and see if there’s anything we can do.

      Thanks,
      Kevin Graham

  11. I have student loans totaling 135,000. No other major debt except for a few medical collections, will the student loans impact me negatively. $48,000 income. 635 credit score.

    Thank you

    1. Hi Shannon:

      Your student loan payments would be counted in your DTI. How much that affects the amount you could be preapproved for depends on your situation. I’m going to recommend you talk to one of our Home Loan Experts by filling out this form or calling (888) 728-4702. They’ll be able to go over your options in detail.

      Thanks,
      Kevin Graham

  12. Hi

    I voluntarily left my job recently for other personal/business interests. So I’m unemployed but have the offer to return to my previous job any time I want (probably won’t for another year or so if I ever do). I currently have $1M liquid, no debt and a FICO of 820. I’m looking to purchase a multi-family property that will generate more than enough cash to cover the mortgage (with a significant down payment) but no one wants to lend to me because I have “no income” despite the proven income from the property and my strong financial position.

    What are my chances on a loan with QL?

    Regards
    Ted

    1. Hi Ted:

      I can tell you that the income piece is a significant portion of your approval application usually. You also can’t necessarily count on always having renters. They move out and you have to find new tenants. That being said, every situation is different. I’m going to recommend you speak with one of our Home Loan Experts by filling out this form or calling (888) 728-4702.

      Thanks,
      Kevin Graham

  13. I am actually concerned, because less than a month ago I applied for a home loan with Quicken Loan and was told by a customer service representative that I was not eligible because I had a very low down payment, credit score above 620 annual salary over $46,000, I am confused. And I am a first time homebuyer.

    1. Hi Diane:

      Credit score is just one of the factors that goes into loan qualification. I’m going to have someone reach out to you about this, but every situation is different. We’ll be in contact shortly.

      Thanks,
      Kevin Graham

  14. Does quicken loans do purchase and rehab loans? If I were thinking of purchasing a house in need of work where would I start?

    1. Hi Jason:

      Unfortunately, Quicken Loans doesn’t do purchase and rehab loans at this time. As far as next steps, there are lenders that do them if that’s what you’re interested in. I would run an internet search and go from there.

      Thanks,
      Kevin Graham

  15. Can I get a loan for a single wide mobile home on a permanent foundation? Land of 3+ ac with room to build a home. What kind of score do we need for a home loan?

  16. I already have a home that was being used for a rental but they demolished it and now I’m considering moving in it but need a loan to remodeled. Could I set up an appointment to talk to someone on the phone. I have a cell phone and get 800 numbers calling all the time so therefore I do not answer the phone . Have score of 630

    1. We can definitely set up an appointment. I’m going to have someone reach out to you via email to get your contact information and set up a time. Alternatively, you can always call 888-728-4702 at your convenience.

  17. I’m currently enrolled in school, my wife is a Registered Nurse at Sarasota Memorial Hospital making great money!! Unfortunately, she had to let her credit cards go while in school, she was paying her own way and couldn’t afford to keep up with it, she had awesome credit and is very responsible, but her credit is not good right now! However, my credit isn’t bad, it’s fair and I’m in the process of trying to bring it up, I only have a little credit card debt, all paid up to date and a car loan in my name, I’m not employed at the moment because I’m going to school full time, is it possible for us to buy a house with my credit and her income, we filed jointly last year!!!

    1. Hi Kyle:

      I think the best thing to do would be to talk to one of our Home Loan Experts. Every situation is different and they can really help you look into this. You can connect with them by filling out this form or calling (888) 728-4702.

      Thanks,
      Kevin Graham

  18. What is the employment length required by quickens for an fha loan. I recently left my job of 5 years. I left to better myself financiallly and to have room for more growth. I am still in sales and have been for almost 10yrs. I have been at my job a short time and my wife has steady income. would we still be able to get a loan

    1. Hi Brian:

      Frankly, it’s hard to give you the answer to that question because every situation is different. It helps that your salary is going up. It also helps that you’re in the same field. My recommendation for next steps would be to go ahead and talk to one of our Home Loan Experts to go over your situation so we can put you in the best possible position to succeed. You can do that by filling out this form or calling 888-728-4702.

      Thanks,
      Kevin Graham

  19. What is the actual minimum score needed for an FHA loan? I was well into the process with a 650 score that then dropped to 631 after the inquiry and was then told I needed 640. Why provide a loan estimate and intent to proceed to then be told different information?

    1. Hi KE:

      The absolute minimum score on an FHA loan is 580, but depending on the situation and the loan purpose we sometimes need a higher score. I’m going to have someone reach out to you to go over this.

      Thanks,
      Kevin Graham

  20. Great forum! We have scores in the 640 range and recently sold our home ($330k)and relocated due to significant job promotion.. We elected to rent to give us a chance to scout out the area before buying again. We gross $150,000 per year and have a dti ratio of about 15%. We do have one big issue, in the confusion of getting our house sold, locating a rental and moving, we were 30 days late with a mortgage payment. We had one credit report show two lates, however when we pulled freecredit report, creditkarma (transunion and experian) and credit wise, we see only the one 30 day late, we are now looking at a home in the $225k range and have $10,000-14,000 to put down. Are we out of luck for a year?

    Thanks for taking a look

    1. Hi Chris:

      From what I can tell, it doesn’t sound like you would be in bad shape, but I’m going to recommend that you talk to one of our licensed mortgage bankers. They’ll be able to tell you for sure. You can do this in a couple ways. Either fill out this form or call 888-728-4702.

      Thanks,
      Kevin Graham

  21. I need help on where to start for a loan. I have found a house I want to purchase already. Please put me in contact with someone who can help please. One credit score is 590. The other is 640. Please help before my dream is sold!! Thank you.

    1. Hi Rebecca:

      We can definitely help you go over your options! If you’d like to get started online, check out Rocket Mortgage. Otherwise, you can fill out this form and a banker licensed in your state will be happy to contact you. Finally, if you would like to get started over the phone you can call 800-251-9080. Have a great day!

      Thanks,
      Kevin Graham

  22. Quick in loans needs to update their information on the internet for people who do not have the credit score they will accept for an fha loan

    1. Hi Tracey:

      While you’re right that this is something the FHA allows, it’s not something every lender does in every situation. There are some additional guidelines involved and the process is different.

      Thanks,
      Kevin Graham

      1. Good morning, Hollie. As mentioned in the article, an FHA mortgage can require as low as a 580 credit score. But there are many types of loans – each with their own requirements. If you’d like more information, let me know, and I’ll have one of our home loan experts reach out to you. Have a nice holiday weekend!

        1. Hi, I’m looking to purchase a home right now where do I need to start my credit score is in between 590 and 600

          1. Hi Cathy:

            Your credit score is at a stage where you can definitely look in your options. I’m going to suggest you take a look at Rocket Mortgage to help you get started on the path toward approval. I hope this helps and let us know if you have any questions.

    1. Hi Reynolds:

      If you’re looking for a home, I recommend checking out My Perfect Home. I’m also going to send this to someone that can help you get preapproved if you’re interested.

      Thanks,
      Kevin Graham

  23. I am writing to you today to get your input on a mortgage issue we seem to be having. My wife and I are looking to buy a house in Holden Ma, Worcester County. The house we are looking at is listed at $424,000. I make $71,000 and she makes $80,000 and we have both worked for our companies for over 14 years. The difficult part is that we have both had short sales due to previous divorces. Hers was over three years ago and mine was 2 years and a few months ago. My credit is about 650 and hers is about 620. We can put down $20-30K for a down payment.

    Can we qualify for a loan other than an FHA?

    Any help would be appreciated. Thank you for your time.

    1. Hey Jeff:

      You may have an option, but I’m going to have a Home Loan Expert reach out to look into this with you.

      Thanks,
      Kevin Graham

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