Well, it's pretty much official. Credit score minimums are going up across the board for FHA loans. FHA has a manual. But the manual which is known as the 4155 doesn't give a minimum credit score. The issue really arises from the fact that investors have been analyzing the performance of all sorts of FHA loans. For example, they analyze the peformances of FHA loans with only 3.5% down with a credit score below 600, and again at 600, at 610, at 620 and son on and so on. Then they analyze the performance of all FHA loans with 5% down with loans below 600, and so on. As a result,
IT'S BEEN DETERMINED THAT
FHA LOANS WITH CREDIT SCORES BELOW 640
HAVE A DEFAULT RATE THAT MOST INVESTORS DON'T WANT TO TOUCH!
So, while it's not 100% across the board, the general rule is that with a 640 score, you should be safe, credit wise. However, if you are below 640, you're likely to have issues, if not, be just plain ineligible for FHA financing.
Remember, exceptions abound, but let's be real here. You need to work with a licensed mortgage professional to examine your situation!
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