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FHA Credit Score

HUD has issued guidelines regarding minimum Credit Scores and Loan-to-Value Ratios in mortgagee letter 10-29. In general, the borrower having a credit score more than 500 is eligible to apply for an FHA-insured mortgage loan. The people who have less than required credit or are having a bad credit report can explore the possibility of obtaining a home loan provided they meet the underwriting guidelines as mentioned in HUD 4155.14.C.3. It is even possible to find a federal program with 100 percent financing and no down payment, but these programs primarily target a specific consumer group whose decision credit scores are not below 500.

FHA Credit Score Requirements 2011



FHA Credit Score Requirements as laid out in the mortgagee letter 10-29 has categorized borrowers into three groups. One with a credit score of more than 580, the other with a credit score between 500 and 579 and the last group with less than 500 score. The first two groups of borrowers are qualified for an FHA-insured financing whereas the last group is not. This means the minimum credit score needed to qualify for an FHA loan is 500 under general condition.

Moreover, the borrower with over 580 credit score is eligible to receive the maximum financing. The maximum loan limit is not the same for all locations, but may vary from one place to another. The range of this limit is from $115,200 to $208,800. The second category of borrowers, on the other hand, will have to set for 90 percent LTV. This means they have to put down at least 10 percent of the home value at the time of closing, and consequently a mortgage insurance premium will be applied to them.

It is to be noted here that these requirements do not apply to single family programs that use Title 1, Home Equity Conversion Mortgages; Hope for Homeowners; Section 247; Section 223(e); Section 248; and Section 238.

FHA Credit Score Guidelines



FHA Credit Score Guidelines should be read completely to understand the minimum qualifications set for a particular loan program. Despite the minimum credit requirements being put at 500, there is some hope for those who have insufficient credit. First time home buyer who may not have a credit history can find ways to build a non-traditional credit history. One possibility is to get a credit card issued and maintain its payment schedule. Moreover, it is also required to follow the underwriting guidelines of HUD 4155.14.C.3. For more information, one can refer to HUD website or call FHA call center at 1-800-CALLFHA.

Website: www.hud.gov





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