What Are 2015 FHA Credit Scores
Many people get confused with the FHA credit score requirements for 2015 and this short review will try to place the puzzle parts in the right place to sort the picture out.
The FICO credit score explained as a risk analysis factor for the lenders, to predict how much risk would it be to lend you money. The FICO credit score range from 300-850 (higher is better). Low score means you are perceived as a bad borrower and the lenders predict based on your FICO score you would either not pay back the mortgage or just be constantly late on payments.
FHA 2015 FICO Score Limits
The Federal Housing Administration FHA want to help more people be home owners and manage to buy homes, and for that they are checking you as a customer with some guidelines and requirements limits they have announced for 2015. They have a number of minimum requirements such as credit score, dept-to-income ratio, FHA down payments requirements, in which the customer must qualify to be able to have a FHA home loan.
Minimum credit score requirements for FHA home loans depend on which FHA loan product the applicant needs. Generally speaking, to get maximum financing on typical new home purchases, applicants should have a credit score of 580 or better. Those with credit scores between 500 and 579 are, according the the FHA guidelines, “limited to 90 percent LTV”.
The U.S. Departments of Housing and Urban Development (HUD) have published at the end of 2014 their new FHA credit score requirements for 2015. In these new guidelines the FHA minimum FICO score for a home loan:
- FHA Credit Score Requirement of 580.
- For the 3.5% FHA down payments loans – FHA score requirement of 580.
Applicants who have a minimum decision credit score of less than 500 are not eligible for FHA mortgages. Those with credit scores of 500 or better are eligible for 100% FHA loan financing with no down payment required when using the FHA 203(h), Mortgage Insurance for Disaster Victims.
But… and this is a big issue on this subject, the FHA has no loans of it’s own… and the Housing Administration is not the lender, they are just backing you up when you request the loan from the primary lenders (Bank of America or local banks).
Banks and Lenders 2015 Score Requirements
While the FHA say they will be guaranteeing any borrower with those minimum FICO scores, the actual lenders are private financial institutes. The lenders are free to set their own minimum qualification requirements as they are the ones who are lending the money, they secure themselves by requesting higher FICO score.
Most Americans have a score above 700 (58%), and the average national FICO score is 692. So as far as the lenders point of view low FICO score borrowers are not only risky but they are not that many thus requirements on them can be tougher.
Lenders will check more parameters except the credit score factor, before deciding whether to preform the transaction with the borrower. They will want to see employments salary, wages, debt-to-income ratio( both front ratio and back ratio) co signers and drill down to the credit report to analyze your pay back abilities.
So if your FICO credit score is close to the 620-640 range you can still get a loan, but the process might be a little longer.
Mind The Gap
So the FHA credit score requirements are set at very low end at 500 and 580 (for the low down payment loans). But the lenders had their FICO credit score requirements raised from 620, to 640. And this is confusing many customers who fall between these two requirements. They qualify for an FHA home loan with credit over 580, but no lender will lend them money with credit score lower than 640.
Close the Gap
The most simple thing to do, is to get hold of that FICO score, analyze it, and with a simple help raise the FICO score up. It takes two parameters, time and guidance.
The process of rebuilding the FICO credit score will include sending letters to all three bureaus Equifax, Experian and TransUnion, finding inaccurate data in the reports, requesting negative remarks to be erased, doing some tweaks to adjust credit cards balance… and before you know it, your score may raise by 30-50 points or more!
Most people do not know but they do NOT need to hire expensive credit attorneys for all of this, they can take advantage of simple and non expensive services and softwares to do most of the work for them.
So What Is Your Next Step?
Every week you are wasting money.. sending dozens of dollars to the rich credit companies, who relay on you to keep doing NOTHING.
If your score is below 700, you might want to do something about it – get this ‘Credit Repair University’ which will save you money and time.
Yes, you might need to invest a small sum to get a grip of things.. But if you think education is expensive.. try ignorance..
You are probably paying thousands of dollars per year in fees and interests to credit companies which could be going straight to your pocket.
So do your math… and take action NOW.