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Why Might I Have Trouble Getting an FHA Loan with a Credit Score Above the Minimum Requirement?

Question from Anno: I want to purchase a home under FHA and use the Starter grant for closing. I have to close on this before end of October… I pulled all of my 3 scores and I am sitting with 633 for vantage 3 on TU and Equifax and Experian FICO 8 is 640 with a FICO 2 at 620.

I have all my collection items paid but one medical bill has not updated to reflect that. I have a certain annual income and the house I’m purchasing is within a certain price range with a certain appraisal. My front estimated dti is less than 10% percent and my back or overall dti is less than 30%.

Can you help me understand why I would be troubled getting a loan when the fha is 580 to 620 and most conventional loans require 620 and above? I just need help if it’s possible. Please and thank you.


Your situation seems to be well within the FHA loan requirements, as you’ve mentioned that your credit scores are above the minimum threshold and your debt-to-income ratio is also within acceptable limits. However, there could be several reasons why you might still face challenges in securing a loan.

Factors That Could Affect Your Loan Approval

Credit History: While your credit scores are above the minimum, lenders also consider your overall credit history. If you have a history of late payments or other negative marks, this could potentially affect your loan approval.

Outstanding Collections: You mentioned that one medical bill has not been updated to reflect payment. This could be a potential issue as lenders often require all collections to be paid off before closing.

Income Stability: Lenders also look at the stability of your income. If you’ve recently changed jobs or if your income varies, this could potentially affect your loan approval.

Steps to Improve Your Chances of Loan Approval

Here are some steps you can take to improve your chances of loan approval:

  • Update Your Credit Report: Contact the credit bureaus to update your credit report to reflect the payment of the medical bill. This could potentially improve your credit score and increase your chances of loan approval.
  • Stabilize Your Income: If possible, try to stabilize your income. This could involve negotiating a steady salary with your employer or finding ways to make your income more predictable.
  • Consult with a Mortgage Broker: A mortgage broker can help you understand the specific requirements of different lenders and can guide you through the loan application process.

Remember, each lender has their own set of criteria for loan approval. While the FHA provides guidelines, lenders may have additional requirements or higher standards. It’s always a good idea to shop around and speak with multiple lenders to understand their specific requirements and to find the best loan for your situation.

According to the Consumer Financial Protection Bureau, it’s also important to consider the total cost of the loan, including interest rates, fees, and other costs, not just whether you can meet the minimum requirements for approval.

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