FHA credit score requirements take effect
10/06/2010
By Credit.com Staff
According to a report from U.S. Housing News, the Federal Housing Authority recently beefed up its requirements for granting government-insured mortgages. Starting on October 4, consumers need a credit score of 500 or better in order to be eligible for a home loan.
Borrowers with a credit score of 580 or above can qualify to make a down payment as little as 3.5 percent of the home's purchase price under the new FHA rules, the report said. Those whose score falls between 500 and 579 will have to put down at least 10 percent of the cost.
However, the rules may just be a formality, as most borrowers with scores of 490 or below likely wouldn't have been able to qualify for a home loan backed by the FHA prior to the rules becoming official anyway, the report said.
Many lenders, not just government agencies, have beefed up lending restrictions in recent months as a way to protect themselves from borrowers with less-than-ideal credit histories.
