Lower Credit Score Needed for FHA Loans

poor-credit-score

The average FICO credit score of closed FHA loans has been falling steadily for the past couple of months to hit one of its lowest levels in March 2014. This can be a great boost to the confidence of prospect buyers who have feared higher interest rates and fast climbing house prices. None of these predictions has materialized so far and this is expected to stimulate the buying activity during the peak house buying season this spring.

In March 2014, the average FICO score for home purchase FHA loans was 684. This marked a decrease of 11 points compared to the whole of 2013. The existing homeowners who chose to refinance their current mortgage with an FHA loan qualified even lower average credit score. It was 672 in March. For comparison, the score average of refinance FHA loans in 2013 was 698. The drop of 26 points is more than significant.

Refinance at
Loan Type

Please enable JavaScript for the best experience.

The average credit scores for conventional loans also had lower levels in March compared to 2013. The average score for conventional purchase mortgages was 747 compared to 759 for the whole of 2013. The average score for conventional refinance loan was 732 during March.

Even though the score decrease rates for FHA and conventional home loans are similar, the mortgages backed by the Federal Housing administration still have much lower credit scores. This automatically makes them more accessible for people who do not have particularly strong credit history. As part of the new Back to Work program of the FHA, even individuals who have been through foreclosure or have gone bankrupt can obtain an FHA loan sooner than before.

In March 2014, the average FICO score across all mortgage loans increased by 1 point from February 2014 to reach 725. Still, this increase is considered to be insignificant and the downward trend is expected to remain.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
Christian

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>


Facebook Iconfacebook like buttonTwitter Icontwitter follow button