Does FHA require a minimum credit score and how is it determined?
Does FHA require a minimum credit score and how is it determined? The borrower is not eligible for FHA-insured financing if the Minimum Decision Credit Score (MDCS) is less than 500. If the MDCS is between 500 and 579 the borrower is limited to a maximum loan-to-value (LTV) of 90% or 10% down payment requirement If the MDCS is at or above 580 the borrower is eligible for maximum financing of 96.5% or 3.5% down payment requirement The lender must downgrade and manually underwrite a mortgage that received an Accept recommendation if only the non-occupying co-borrower has a credit score. Borrowers with non-traditional or insufficient credit histories are eligible for maximum financing, but must be manually underwritten using the procedures in Handbook 4000.1 II.A.5. The MDCS refers to • the credit score reported on the borrower’s credit report when all reported scores are the same. • the lowest score where two differing scores are reported • the middle scor...