The FH Guidelines on the minimum Credit Score needed by a borrower to insure a loan is 580. The majority of FHA Lenders require between a 620 and 640 score for FHA mortgages. Finding a reputable Lender that offers loans to borrowers that meet the minimum credit score allowed by the FHA can be difficult. Lenders in our network can work with scores down to a 580.
Home buyers who qualify for an FHA loan, but do not have funds for the down payment and closing costs. There are certain income and credit score requirements for these types of programs, which vary by location.
The HomePath program was created by Fannie Mae to offer foreclosed homes directly to qualified buyers. This special program allows owner occupied home buyers a chance to buy foreclosures before investors. Read more on the HomePath website
Conventional vs FHA Loans
We compare the Pros and Cons of both conventional and FHA loans. Our lenders offer both types of loan products. Conventional loans typically require a higher down payment, and more strict credit score requirements. FHA Lenders can offer home loans to borrowers with bad credit, a 580 credit score may be enough to qualify in some cases. Submit your information to speak to one of our network lenders about which type of loan is best for you.
Typically the lower your credit score is the higher your closing costs will be. Because the lender actually receives less commission when selling your loan profile to banks because there is a higher risk of default. For this reason lenders often recoup their lost income from the borrower in the form of closing costs. On average you can expect to pay between 1-5% for closing costs. For FHA Loans up to 6% of the closing costs can be paid by the seller. Make sure your real estate agent includes seller paid closing costs in the original purchase agreement.
VA Home Loans are provided by private lenders, such as banks and mortgage companies. VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms such as lower credit score requirements.