What Credit Score Do You Need for an FHA Loan? Let’s Make It Simple
So, you’re dreaming of buying a home—but your credit score is giving you the side-eye. Don’t worry, you’re not alone. The good news? FHA loans are like the cozy cardigan of the mortgage world: warm, forgiving, and made to fit a wide range of buyers. Whether your credit score is a little shy or hasn’t even shown up to the party yet, there’s a good chance you can still get your foot in the door—literally.
Let’s walk through what credit score you need, how it affects your options, and how Guild Mortgage can help you find your way home.
FHA Loans: A Friendly Option for Imperfect Credit
FHA loans are backed by the Federal Housing Administration, which means they’re designed to help more people become homeowners—even if their credit history isn’t exactly sparkling. If your score is on the lower side, or you don’t have one at all, FHA loans could be your golden ticket.
Guild Mortgage’s Credit Score Requirements
Here’s the scoop: Guild Mortgage can work with credit scores as low as 540. But if you’re in that range, you’ll need to bring a 10 percent down payment to the table. You’ll also need to keep your debt-to-income ratio around 43 percent or lower. And keep in mind, lenders might add a few extra requirements depending on your situation.
Now, if your score is 580 or higher, things get a little more exciting. You’ll only need a 3.5 percent down payment, which is one of the most appealing parts of the FHA program. It’s like getting a discount on your ticket to homeownership.
Guild also offers down payment assistance programs like Zero Down, which bundles an FHA mortgage with a second mortgage to cover your down payment and closing costs. These programs typically require a credit score of 600 or higher, so if you’re in that range, you’ve got even more options to explore.
No Credit Score? No Problem
If you’re a first-time buyer and you don’t have a credit score, Guild’s Complete Rate program might be just what you need. Instead of relying on traditional credit reports, this program looks at your bank statements to see if you’ve been making regular deposits and paying bills like rent and utilities on time.
Depending on the loan type, you might need anywhere from zero to 3.5 percent down. You could also qualify for lower interest rates and reduced loan fees. It’s a smart way to show your financial responsibility—even if you haven’t built up a credit score yet.
How Your Credit Score Shapes Your Loan
Your credit score doesn’t just affect whether you qualify—it also influences the terms of your loan. Here’s how:
• If your score is between 540 and 579, you’ll need a 10 percent down payment.
• If your score is 580 or higher, you’ll only need 3.5 percent down.
• Higher scores can help you qualify for better interest rates, which means lower monthly payments.
• All FHA loans require mortgage insurance premiums (MIP), but a stronger credit profile might help you land a more affordable loan overall.
Other Things Lenders Look For
Even if your credit score checks out, lenders will still want to see a few other things:
• A steady employment history (usually two years)
• Consistent income
• A manageable debt-to-income ratio (generally below 43 percent)
• A property that meets FHA appraisal standards
Tips to Give Your Credit Score a Little Love
Want to boost your score before applying? Try these:
• Pay your bills on time—every time
• Chip away at existing debt
• Avoid opening new credit lines unless absolutely necessary
• Check your credit report for errors and fix them
• Ask to be added as an authorized user on someone’s well-managed credit account
Ready to Take the Next Step?
FHA loans are one of the most accessible paths to homeownership, especially if your credit score isn’t perfect. There are options starting at a score of 540, and with a little preparation, you could qualify for even better terms.
If you’re ready to explore your options, reach out! I’ll help you find the best fit for your financial situation and guide you through the process with care. Your dream home might be closer than you think.
*Income limits apply. No minimum contribution required from the borrower when DPA second mortgage is combined with FHA first mortgage. Our Zero Down mortgage program is not affiliated with HUD.
The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.