FHA Loan Credit Score Requirements For 2022

FHA Minimum Credit Score Requirements

Technically, you can get approved for an FHA loan with a median FICO® Score of as low as 500, but there are some serious drawbacks to an FHA loan with a score that low.

The first is that you’ll need a down payment of at least 10%. Secondly, when qualifying with a score that low, it’s considered a subprime loan. What that means from a practical perspective is that even if you can get the loan, you won’t get the best terms and could end up with a much higher annual percentage rate (APR).

Also, most lenders, including Rocket Mortgage®, won’t do the loan if your median score is below 580. We’ll get into this below.

Finally, you have to have some very low qualifying ratios. To qualify with a median FICO® Score of below 580, you need to pay close attention to two ratios: your housing expense ratio and your overall debt-to-income ratio (DTI).

Understanding Your Housing Expense Ratio

Your housing expense ratio is the percentage of your gross monthly income that’s used for housing expenses. It’s calculated as follows:

(Installment debt + Revolving debt payments) / Gross monthly income

The amount being spent monthly on housing expenses can’t exceed 31% of your gross income.

Understanding Your Debt-To-Income Ratio

Your DTI takes into tài khoản your debts, or fixed monthly expenses. It includes your mortgage, minimum credit card payment, student loan, auto loan and other debts. It doesn’t include variable expenses like groceries, utilities, gas, health insurance and car insurance.

DTI is calculated with the following formula:

Monthly expenses / Gross monthly income

With a median FICO® Score below 580, your DTI can’t go over 45% of your gross monthly income. Housing expense and DTI have a major impact on how much house you can afford.

In addition to the restrictions laid out above, it’s important to note that very few lenders offer these subprime FHA loans and they may have stricter requirements than what the FHA sets. At Rocket Mortgage, you have to have a median FICO® Score of at least 580 to qualify and may need to have a DTI as low as 38%.