Credit Requirements for an FHA Loan in 2022

This ARTICLE Is About The HUD Guidelines On Credit Scores On FHA Loans

We will be covering the HUD Guidelines On Credit Scores On FHA Loans. FHA Loans remain the most popular home mortgage program in the nation due to its lax guidelines on credit and down payment. Homebuyers with credit scores down to 500 FICO can become eligible for an FHA loan with an approve/eligible per automated underwriting system (AUS). However, any borrower with a credit score under 580 FICO needs to put a 10% down payment on a home purchase per HUD Guidelines.

FHA Loans Explained

HUD stands for Housing and Urban Development.

HUD stands for Housing and Urban Development. HUD is the parent of FHA. FHA is not a lender and does not originate nor fund FHA loans. FHA loans are originated, processed, underwritten, and serviced by private mortgage companies. The role of FHA is to insure FHA loans are funded by private lenders in the event the borrower defaults on their FHA loans. In order for FHA to insure and partially guarantee lenders in the event the borrower defaults on the FHA loans, the lender needs to follow strict HUD Guidelines on FHA loans. In the event, if the lender did not abide by all HUD Guidelines, FHA will not insure the FHA loans funded by the private lender in the event of default and/or foreclosure.

In this article, we will discuss and cover HUD Guidelines on credit scores on FHA loans.

Understanding The Difference Between HUD Guidelines Versus Lender Overlays

All lenders need to have their borrowers meet the minimum HUD Agency Mortgage Guidelines in order for HUD to insure and/or partially guarantee borrowers who default on their FHA loans. However, lenders can have additional higher lending requirements that are above and beyond the minimum HUD Guidelines which are called lender overlays. Most lenders will have lender overlays on FHA loans. However, there are lenders like Capital Lending Network that have no lender overlays on FHA loans. CLN will just go off the automated underwriting system findings (AUS) and has no other lender overlays. As long as the borrower can get an approve/eligible per AUS, CLN will approve, process, underwrite, and fund the loan. CLN has no additional lender overlays.

HUD Guidelines On Credit Scores: Minimum HUD Agency Guidelines On FHA Loans

Borrowers with credit scores down to 500 FICO can qualify for an FHA loan.

Borrowers with credit scores down to 500 FICO can qualify for an FHA loan. However, borrowers with credit scores under 580 FICO require a 10% down payment per HUD Guidelines. Borrowers can qualify for an FHA loan with credit scores down to 500 FICO. Borrowers with at least a 580 credit score or higher can qualify for an FHA loan with a 3.5% down payment. Outstanding collections and charged-off accounts do not have to be paid. There is a two-year waiting period after the Chapter 7 Bankruptcy discharged date. There is a three-year waiting period after foreclosure, deed in lieu of foreclosure, short sale to qualify for an FHA loan. Borrowers in Chapter 13 repayment can qualify for an FHA loan after making twelve timely payments and trustee approval. There is in mandatory waiting period after the Chapter 13 discharge date.

Capital Lending Network, Inc. are experts in manual underwriting. VA and FHA Loans are the only two loan programs that allow manual underwriting.


Peter has 7+ years of experience in residential lending. He is a licensed Realtor in the Chicagoland area.

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