Whether they go up or down, FHA loans will always be around. You don’t pay as much for FHA loans as you do for conventional loans. If lenders give too many loans to people with low credit scores, HUD might not let them write FHA-backed mortgages. Borrowers with credit scores under 620 are less likely to get a loan.
- The FHA requirements for credit score and down payments are far lower than for conventional loans.
- Borrowers can technically qualify for an FHA loan with credit scores of at least 580 and a down payment of just 3.5 percent, according to HUD.
- “Loans with the lowest credit scores tend to default at a much higher rate, and lenders are afraid that if they issue too many loans that later fail, HUD will no longer allow them to write FHA-backed mortgages.”
Alliance Credit Counseling
8000 Corporate Center Dr Suite 114
Charlotte, NC 28226
(888-995-7856) / (704-341-1010)