Credit Score in Portland>Question Details

Matthew, Home Buyer in Portland, OR

Why do I hear that FHA loans does not require a minimum FICO score to meet qualifications?

Asked by Matthew, Portland, OR Tue Nov 10, 2009

Yet, I am told by brokers/lenders that I have to have a minimum fico socre of 620?

Help the community by answering this question:


While FHA does not officially have a minimum FICO score, as previously answered, lenders almost all have minimum scores. Contrary to the first answer, most lenders here in Oregon do offer better rates for borrowers with better scores, and most lenders do have a minimum of between 620 - 660. The best rates are often offered for those with a score of 680 and up. If your score is lower than 660, some lenders will not do the loan at all, while others will charge a higher rate, and will have a minimum score they will accept.
0 votes Thank Flag Link Tue Nov 10, 2009
Matthew, with FHA loans the the INTEREST RATE is not driven by your FICO score. There is a minimum qualifying FICO score for FHA, but once you meet that score requirement the interest rate is not tied to the FICO score. For example, an FHA borrower with a 680 credit score would receive the same interest rate as an FHA borrower with a 740 credit score.

Compare that to conventional financing where rates are tied to credit scores. In order to get the best possible rate with conventional financing, a borrower would need a very high FICO score, say a 740+.

Hope that helps. Contact me if you need more clarification.
0 votes Thank Flag Link Tue Nov 10, 2009
The FHA does not require a minimum fico score but they do not give you the loan, a lender does. The lenders are the ones who put the credit score minimums on the FHA products. the reason is, FHA insured or not, lenders don't want anything to do with a loan that goes bad and a borrower with a very low score is much more likely to go bad.
0 votes Thank Flag Link Tue Nov 10, 2009
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