What is the minimum credit score for FHA loan? You will be happy to know that the minimum credit score for FHA loan is much lower than a standard loan, and so naturally, it will be much easier for you to get approved for this. Let us now see what the FHA loan is, and why it is easier to get it.
FHA as you probably know already stands for Federal Housing Administration. It will be good to realize at the very outset that the FHA will not give you the loan itself. The FHA will rather insure the loan that is given by any private lenders in the country. What this means is that, when you are taking a loan like this, the FHA will stand by you and give the assurance to the lending company that if you are not able to repay the mortgage for whatever reason, then the FHA will come in and intervene. This is all the assurance the lending company needs. They feel relieved to issue the loan as their risk is reduced greatly.
The FHA loan program is however not for everybody. You can qualify if you are buying a home for the first time. This program is best suited for all those people whose application would have otherwise been turned down because of a less than perfect credit score. The FHA is standing by then to help them get the loan they want to buy their property. The FHA is actually taking out the risk here that the lending company has to live with. Once this happens, they do not have any problems with issuing the loan.
However you should realize that the FHA will not stand beside just about anybody. There is still a minimum credit score for FHA loan. You will get the help from FHA if you have this. So what is that minimum credit score? Let us find out.
The Score You Need For the FHA Loan
It depends on the kind of loan you are seeking. To get the loan with FHA, you should have at least a 580 credit score. Of course it only helps if you have a higher score. Sometimes however the FHA will help those who have a score that is between 500 and 579. Below this, you cannot expect the FHA to come to your aid. It would thus be better that you make a serious attempt to improve your score before you apply for the loan again. Between 500 and 579, the FHA may just insure 90% of the loan you are taking. But above this, the FHA will make you eligible for 100% of the loan.
The minimum credit score for FHA loan regulation is also application for all those people who do not have a credit history. This can happen if you have never taken a loan before and do not use a credit card. But as you can imagine, this is very rare, as all of us have credit cards now.
The minimum credit score for FHA loan regulation if you qualify is indeed great news for all those people who have no other way to get their application approved.