Last Friday, the U.S. Department of Housing and Urban Development (HUD) formally introduced minimum credit-score and loan-to-value ratio (LTV) requirements for Federal Housing Administration (FHA)-insured loans. The requirements will take effect beginning with case numbers assigned on or after Oct. 4, according to Mortgagee Letter 10-29.
Borrowers with credit scores of 580 or better will be eligible for maximum financing, while borrowers with credit scores between 500 and 579 will be eligible for up to 90% LTV financing.
Borrowers whose scores are below 500 will be ineligible for FHA-insured financing.
The FHA previously announced that, also starting Oct. 4, it will lower the up-front mortgage insurance premium (except for reverse mortgages) and increase the annual premium.