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Fha stands for Federal Housing Administration. Fha loan is a federal financial facility designed to help those with housing loans insured by Federal Housing Administration. Fha loans are offered by lenders who meet requirements set by the Federal Housing Administration and their main advantage is the minimum down payment requirements. Fha loans require one to be able to pay as low as 3.5 per cent of the buying price. Other lenders require one to pay at least 10 per cent.

It is not clear exactly what the minimum credit score requirement for fha loans are. Some people think you could get it by as little as 460 points while some think you actually require above 600 credit score to qualify. Institutions which offer the fha loans have varied requirement for minimum credit score but it is certain that the lower the credit score the higher the minimum down payment requirement. That is why it is widely believed that you need in excess of 620 credit score to actually benefit from an fha loan offering a lower than 10 per cent down payment requirement.

Fha loan credit score also varies with an individual’s debt history. Those who have had foreclosures within the last three months simply do not qualify for fha based on fha credit score. Their chance of being considered for fha loan depends on Acceptance Approval from Total scorecard. Those who filed for bankruptcy under chapter seven and were discharged within the last two years also not eligible for fha loan no matter what credit scores they may have unless an Acceptance Approval comes from Total scorecard. Those on chapter thirteen of bankruptcy are limited to a maximum of 85 per cent of Loan to Value for cash irrespective their credit scores.

Fha loan credit score also affects the mortgage insurance premium an individual pays. Loans with down payments of less than 10 per cent and payment period of over 15 years will attract mortgage insurance premium of 5 per cent. A down payment of less than 5 per cent with over 15 years payment periods attract a mortgage insurance premium payment of 55 per cent in monthly installments.

There are variations on fha credit score depending on the periods of payment and the down payment percentage. Fha is not very specific on minimum credit score but experience shows that you get better rates with credit scores of over 620. Again an individual’s debt history determines the terms that one can get from fha.