Recently I received an FHA approval for a couple with a credit score of 603. In the past few months I have seen an easing in the credit policies of both conventional and FHA loans and that’s encouraging. Normally, FHA lenders requires at least a 620 credit score to get anything approved. We now have lenders who will do FHA loans for borrowers with credit scores down to 580.
These particular borrowers had a few collections, but their high credit card balances were killing their credit scores. It did help that they had a low debt to income ratio.
Keep in mind: conventional loans, regardless of the down payment still require a credit score of 620 per Fannie Mae and Freddie Mac guidelines.