203k Loan Credit Minimums: What You Need to Know
While FHA loan credit requirements aren’t as strict as the requirements for conventional loans, they still exist. And, unfortunately for borrowers with lower credit scores, most lenders have higher credit requirements for 203k loans than other FHA loans, such as the 203b loan. This is because 203k loans are considered significantly riskier than other types of FHA loans, since they involve property repair or renovation.
What is the Minimum Credit Score for an FHA Home Loan?
Before we get into credit score requirements for the 203k loan, let’s take a look at the overall credit requirements for FHA loans in general. These include:
A minimum FICO credit score of 500 to qualify for a 10% down loan
A minimum FICO credit score of 580 to qualify for a 3.5% down loan
203k Credit Score Requirements Vary by Lender
Technically, the FHA credit minimums are the same, no matter what lender you decide to work with. However, it’s the lender, not the FHA, that makes the decision to approve your loan. Therefore, they can set the credit bar as high as they want. In practice, this means that most borrowers will need to have a minimum credit score of between 620 and 640 in order to qualify for a 203k loan. Some lenders may approve loans under 620, or even under 600 (in very rare cases). However, this will typically result in much higher interest rates.