I have read so many things online about FHA 580 minimum but here I have seen something different? Just curious what is the minimum score requirement for FHA and USDA? Ty
USDA Direct is 660, but if you are able to jump thru a bunch of other qualifying hoops, they make some exceptions.
It used to be 620.
USDA has many advantages.
In my area USDA direct minumum is a 640 mid credit score. I would check with your local USDA field office for policy/procedures in your area. FHA is now a minumum of 640 credit score although I hear a few lenders will still except a minumum 620 credit score...good luck with finding a lender taking a 620 credit score for an FHA loan.
First, Direct and Guaranteed have different parameters. I'm talking about direct.
Underwriting is mostly national, not local.
My answer is actually wrong. You can get by with less than a 660, but I found the underwriting rules to be chokingly difficult under that. Especially problematic is that they enforce the 29% rule if you're under that, which (for many people) isn't much house. A lot of the older websites are giving information that isn't quite accurate. Last year they ran out of money early, so they are picking and choosing recipients more carefully.
I am going through the USDA Direct loan process right now and the minumum score for my area(and better yet the entire state that I live in) is a 640 mid credit score not a 660. Which is why I suggested they contact their local office for more detailed information.
I got pre approved for a fha with a credit score of 567 barley made it the lender said, he said i will get my letter once i have my down payment in my banking account , i think they are baseing mine off on our income and our on time payments with our chapter 13
I, too was confused about the minimum score requirement and called several lenders just this past January -banks, brokers and my credit union - to see what was going on with all the conflicting information. I received answers ranging from 580 to 640 as minimum score requirements so I finally called HUD and spoke with the FHA department myself. The deal is that FHA guidelines allow for a credit score as low as 580 but indivicual lenders can set their own minimum score requirements. (FHA themselves do not give the loan, they only give the guidelines). From what I can see in my area (suburban Philadelphia) most lenders want at least a 620, some want a 640 (my credit union wants a 640!!) and the lenders who will approve loans between 580 to 619 are hard to find. I finally found a broker who said that he can provide me with a mortgage (my middle score when I spoke with him was 603). Then he tells me he only has one lender who is writing loans for scores under 620 and the interest rate he quoted me is no longer accurate. Thankfully, my middle score is now 618 (thanks to MyFico forums) and since I won't be closing for approx 45 days, I am pretty sure it will be up to or over 620, and I should be able to get the better rate. Bottom line is don't give up in your search and follow the advice on My fico - it really works. My score was 519 when I started. Good Luck!
bethm99, you provided much good information. Just to summarize: FHA will guarantee a loan at 580 or above. Individual lenders, like myself, decide for themselves how much risk they want to take and usually set a higher minimum score. We use 620.
Why is this, you might ask. Doesn't FHA guarantee the loan? Yes they do. The devil is in the fine print. They reduce a lender's risk, but they do not eliminate the risk. A lender will still suffer losses if borrower defaults. That's why lenders are allowed to set criteria that is higher than FHAs.