2017 FHA Minimum Credit Score Requirements

2017 Fannie Mae Changes
2017 Fannie Mae Changes
January 12, 2017
2017 Mortgage Lender Search
2017 Mortgage Lender Search
January 13, 2017
2017 FHA Minimum Credit Score Requirements

2017 FHA Minimum Credit Score Requirements: Know Your Scores

If there are common questions and misconceptions that always seem to come up from potential borrowers it is the determination of the 2017 FHA Minimum Credit Score Requirements.  There are 3 different rates that borrowers use, and they need to know the proper ones.  First there is the rate the borrower thinks they need to qualify, then there is a lender required credit score which is normally a lender overlay or a guideline put in place above and beyond program guidelines, and finally there is the actual loan program guideline from the FHA or Federal Housing Administration.  When in search of the 2017 FHA Minimum Credit Score Requirements you could come across loan officers who say you need a 620 or even a minimum 640 credit score in order to get an FHA Loan with 3.5% down.  Let me tell you one thing, these people couldn’t be further from the truth and are giving you the lending institution rate and not the guideline rate.  If you are curious about what the guideline credit scores actually are as per the HUD Guidelines you need to see the following for the 2017 FHA Minimum Credit Score Requirements:

–          As long as the borrower has a minimum FICO score of 580 then they are eligible to qualify for an FHA Loan with 3.5% down payment, however the maximum debt to income ratio is 43% in order for the borrower to receive an approve/eligible from AUS or the Automated Underwriting System.

–          If the borrower has at least a 620 FICO credit score then the borrower can obtain an FHA Loan with 3.5% down and the debt to income ratio increases from 43% to 56.9% with a front end ratio of 46.9%.

–          There is still hope for the borrowers with a FICO credit score of 500-579 and that is they can qualify for an FHA Loan with 10% down and additional Compensating Factors to strengthen their case to underwriters.

2017 FHA Minimum Credit Score Requirements: Raising Your Credit Scores

Unlike some lenders who have an abundance of lender overlays that require you to jump through hoops to get a loan, here at Loan Consultants we try to work with the minimum guidelines, and even then, your credit scores might need some help.  Below is some advice on how you can increase your credit scores in order to comply with the 2017 FHA Minimum Credit Score Requirements.

  1. The first thing you can do is to try and get up to 3 secured credit cards with a maximum balance of at least $500 for each card.  For every secured card you obtain, you can gain up to 20 points in your FICO credit score.
  2. If you have a family member either living at your address or at least has the same last name, you can be added as an authorized user to their card.  Becoming an authorized user will take that individuals positive credit history and it will be included on your credit report.
  3. If you have medical collection accounts then you are in business because FHA Guidelines declare medical collections exempt.  If you have medical collections that are active, you can always dispute these accounts.  Placing a dispute on an account will remove its impact from your FICO score and it will be treated as if it is not there.

2017 FHA Minimum Credit Score Requirements: Conclusion

As you can see there is a big difference between 2017 FHA Minimum Credit Score Requirements and what most lenders are going to try and enforce.  If you want a to work with lenders who do loans to the minimum requirements then give us a call today at 888-900-1020 or email us at contact@loanconsultants.org.  We look forward to hearing from you any time day, nights, weekends, and holidays in order to help you!

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