How to Get an FHA Loan Even With Modest Credit

fha mortgage

If you are an aspiring home buyer in the United States today, you will never find a home loan program that offers as much flexibility as an FHA loan does. A lot of wishful homeowners have seen their dreams of owning a house through conventional loans or other method vanish in thin air after they are asked to show a minimum credit score and higher income requirements, not to mention the down payment and closing costs.

With an FHA, however, even those that are yet to establish their credit history get a chance of owning their dream home.

An Overview of the FHA Home Loan Program

Insured by the Federal Housing Administration or FHA and issued by approved mortgage lenders, FHA loans are designed to make homeownership accessible to people with low to moderate income and less-than-ideal credit. In other words, these are for people who have difficulty meeting the requirements in most conventional loans. Ideally, these are what FHA home loans are made for:

  • borrowers with low to moderate income
  • borrowers with low to medium credit
  • borrowers with non-traditional sources of income
  • borrowers who cannot come up with down payment from their own pockets
  • borrowers who need to purchase and repair a property


Typically, the minimum credit requirement for getting a mortgage is between 620 to 640, but not so with an FHA. Even those with a credit score of at least 500 may qualify, provided they meet other standards. If you have between 500 to 579, you may get approved as long as you can give at least 10% down payment, but if your credit score is 580 and above, you only need 3.5% down payment to get started on making your ultimate American dream come true.

As in any other home loan, lenders will also be looking at your income. They need to know you are more than capable of paying the monthly mortgage payments, so they would prefer that you will have been employed with the same employer for the last two years and have no intention of going anywhere within the next three years.

If, however, you are self-employed or earning income from non-traditional income streams, you may still qualify as long as you can show proof of steady and sufficient income.

Debt-to-income Ratio

While most lenders require potential borrowers to have a DTI of around 41%, FHA may allow 55% to 57%. This is the federal government’s way of showing how committed they are to helping citizens acquire their own homes. The FHA tries to look beyond the numbers and on to other factors when considering loan applicants for approval.


In addition to all these incredible features, FHA home loans don’t even require borrowers to get money for the down payment and closing costs from their own pockets. The entire amount or a portion of it can be a gift from relatives and friends, or perhaps government agencies as long as the borrower is qualified for a grant.

You will never find any other program as flexible as an FHA. If you believe you can meet or even exceed these requirements, feel free to get in touch with an approved FHA lender and apply for a mortgage today. This could be the beginning of your journey toward making your dream of owning a home a reality.

by: Lorenza