Credit Scores Needed for VA and FHA Loans

FHA and VA loans are two types of popular mortgage options—especially among first-time homebuyers. Both of these government-backed home loan programs come with several attractive features, including low to no down payment requirement and the potential for competitive interest rates.

Yet perhaps the most appealing characteristics that both FHA and VA loans have to offer are their forgiving credit score criteria. With VA loans, there is no official minimum credit score requirement.^[1] But lenders may set their own credit score requirements (called lender overlays). For FHA loans, borrowers could be eligible for a mortgage with a FICO® Score as low as 500 (with a 10% down payment). But if you want to be eligible for the lower 3.5% down payment option on an FHA loan, you’ll need a FICO Score of 580 or higher.^[2]

Of course, there are important details you should understand when it comes to the credit score requirements of both FHA and VA loans. Although the official loan program guidelines state that borrowers may qualify for a VA loan with any credit score and an FHA loan with a credit score as low as 500, lenders don’t have to approve anyone for a loan if they’re uncomfortable with the risk. Buying a home with bad credit isn’t necessarily impossible, but it can be more challenging and more expensive.

The guide below will give you a basic understanding of how FHA and VA loans work. You’ll also learn more about FHA and VA credit score requirements, other eligibility requirements for these types of loans, and how your credit score could affect the price you pay for financing.

What is an FHA loan?

An FHA loan is a type of federally-backed mortgage that lenders issue to borrowers who want to purchase a home. The Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD), insures the loans to make homeownership more accessible for people who might not qualify for other types of mortgages like conventional loans.^[4]

Because the federal government insures the loans, lenders have financial protection if borrowers don’t repay their debts as promised. If a borrower defaults on their loan, the lender can file a claim with the FHA to recuperate some of its losses. This arrangement lowers the lender’s risks.^[5]

You might want to consider an FHA loan if you’re trying to buy a home but you have bad credit or other credit-related challenges that might make qualifying for a traditional mortgage a challenge. An FHA loan might also make sense if you’re not eligible for other government-backed home loans like a VA loan or USDA loan.

FHA loan requirements

To be eligible for an FHA loan, you’ll need to satisfy the basic criteria below.

• Down payment: You typically need to put at least 3.5% down to qualify for an FHA loan (with a FICO Score of 580 or higher). But lenders that accept borrowers with credit scores below 580 (e.g. 500-579) require a 10% down payment.
• Debt-to-income ratio: Your debt-to-income (DTI) ratio is a calculation that lets lenders know how much you’re spending on debt compared to the income you earn. If your DTI ratio is too high, you may have trouble managing your credit obligations. The maximum DTI ratio you can have for an FHA loan is 57%. But it may be difficult to find lenders willing to work with you if your DTI is that high. Instead, lenders often prefer borrowers to have a DTI of 36%-41% (or below). A lower DTI might also help you secure a better interest rate.^[6]
• Property type: In general, you can only use FHA loans to purchase a primary residence. Yet you may also be able to use FHA loans to buy multi-unit investment properties if you plan on living in one of the units for at least a year.^[7]
• FHA appraisal: The property you plan to buy will need to meet FHA minimum property standards of safety, security, and soundness before you can use an FHA loan to finance your purchase.^[8]
• Loan limits: Each year, the FHA sets county-specific loan limits that control the maximum amount of money a borrower can access using an FHA loan. You can visit the HUD website for information on FHA limits in your area. For 2025, FHA single-family home loan limits range from $524,225 in low-cost areas to $1,209,750 in high-cost counties.^[9]
• Mortgage insurance: When you take out an FHA loan, your lender will require you to pay two types of mortgage insurance—upfront and annual. Upfront mortgage insurance premium (UFMIP) usually costs around 1.75% of your loan amount. You can typically pay this upfront or add it to your loan amount. Your annual mortgage insurance premiums (MIP) may range between 0.45% to 1.05% of your loan amount—split into 12 monthly installments each year that your lender will add onto the cost of your monthly mortgage payment.^[10]

Keep in mind that lenders may also set their own loan requirements on top of the basic program guidelines for FHA loans—especially when it comes to minimum credit scores. We’ll cover FHA loan credit score requirements in detail below.

What is a VA loan?

A VA loan is another type of federally-backed mortgage that private lenders issue to eligible borrowers. The U.S. Department of Veterans Affairs (VA) provides the home loan guarantee benefit for these loans to help make homeownership more accessible for Servicemembers, Veterans, and qualified surviving spouses.^[11]

A lender’s risk level with a VA loan is lower compared to traditional mortgages. If the borrower defaults on their mortgage, the VA will repay a portion of the debt to the lender. As a result, lenders can offer borrowers more favorable terms on VA loans. And it tends to be easier to qualify for a VA loan compared to other types of mortgages as well. Since 1944, the VA has guaranteed over 24 million home loans to eligible Veterans, Servicemembers, and surviving spouses.^[12]

VA loan requirements

Before a lender approves you for a VA loan, you’ll need to satisfy several conditions. Below is a look at some basic VA loan requirements.

• VA Certificate of Eligibility: To qualify for a VA loan, you’ll first need a Certificate of Eligibility or COE. You may be eligible for a COE once you meet the minimum active-duty service requirement based on the dates you served.
• Down payment: There’s no down payment requirement for the VA home loan program. And although providing a down payment might be beneficial for other reasons (e.g., reducing your funding fee, lowering your purchase price, etc.), over 80% of VA loans close without a down payment.^[12]
• Debt-to-income ratio: The VA doesn’t set a maximum DTI ratio that borrowers need to satisfy. But if a borrower has a DTI ratio above 41%, their loan application may need to show strength in other areas such as a good credit score, liquid assets, or other compensating factors. Furthermore, many VA loan lenders prefer applicants to have a DTI ratio of 41% or below.^[13] And you should never borrow more than you’re personally comfortable repaying.
• Funding fee: Most VA loans feature funding fees that could range from 1.25% to 3.30% of the loan amount.^[14] That fee could add up to as much as $12,840 on a $389,091 loan (the average VA loan amount in January 2025 according to U.S Department of Veterans Affairs data).^[15]
• VA appraisal: Before you can purchase a property with a VA loan, the home will have to pass a VA appraisal. The appraisal will assess the home for standard security and safety measures (just like a standard home appraisal), but it also goes further. For example, electric, cooling, and heating systems must be up to current code standards, there can be no lead paint in the home, the roof must be in good condition with a few years of life remaining, and there can be no evidence of radon gas. This process aims to make sure that Servicemembers and veterans receive quality homes and to protect lenders and the VA from potential losses.^[16]

The U.S. Department of Veterans Affairs sets the general guidelines for the VA loan program. But individual lenders may have their own (often stricter) qualification requirements as well—especially when it comes to credit scores which we’ll cover in more detail below.

Credit score for an FHA loan

In general, you need at least a 580 FICO Score to qualify for an FHA loan. And certain FHA lenders might even require a 620 credit score or higher before you’re eligible for financing.^[17]

According to the program guidelines, you might be able to get a subprime FHA loan with a credit score as low as 500. But even if you can find a lender that’s willing to work with you when you have a credit score between 500-579, there are significant drawbacks to consider before you apply for an FHA loan at this credit score range.

• Interest rate: With any mortgage loan, FHA or otherwise, your credit score impacts the interest rate your lender will charge you. You’ll typically receive less competitive APR offers from FHA lenders if you have a fair or bad credit score.
• Down payment: Another drawback of applying for an FHA loan with a FICO Score below 580 is the down payment requirement. Most FHA loans only require 3.5% down. FHA loans for borrowers with credit score below 580, however, require a 10% down payment. On a $389,000 mortgage, that’s a difference of $25,285—$13,615 for a 3.5% down payment versus $38,900 for a 10% down payment.
• DTI ratio: If your FICO Score is below 580, the DTI requirements on your FHA loan could be stricter. The maximum DTI ratio for an FHA loan with a median FICO Score below 580 is 45% (if you can find a lender that’s willing to approve you at that ratio).^[18]

Credit score for a VA loan

The U.S. Department of Veterans Affairs doesn’t set a minimum credit score requirement for VA loan borrowers. So, it’s technically possible to qualify for a VA loan with bad credit scores or even no credit score at all. Qualifying for a VA loan with bad credit or no credit, however, might not be easy.

Remember that the federal government doesn’t originate VA loans but guarantees the loans for VA lenders. So, if you’re interested in a VA loan, you’ll not only need to satisfy basic VA loan guidelines but you’ll also need to satisfy additional loan requirements that your individual lender puts in place.

Some lenders may require you to have a 620 FICO Score to take out a VA loan. For larger loan amounts (also known as jumbo loans), you might need an even higher credit score.^[1] It’s also possible to find some lenders that may issue VA loans if you have a credit score as low as 580 and lenders with no minimum credit score requirement at all.^[19] But keep in mind that a higher credit score could work in your favor when it comes to your interest rate and other loan terms.

How your credit score can impact your mortgage interest rate

As mentioned above, a lower FICO Score can cause lenders to offer you higher interest rates on mortgage loans. This fact is true whether you’re applying for a VA loan, an FHA loan, or some other type of mortgage financing.

The reason a lower credit score can impact your interest rate is because it indicates to a lender that you’re less likely to pay future credit obligations on time.^[20] Charging a higher interest rate is one way a lender can help offset the higher risk you represent as a borrower in this situation.

Here’s a look at how much different annual percentage rates (APRs) could cost you on a 30-year, fixed-rate mortgage loan for a $389,000 home loan.

Source: myFICO Loan Savings Calculator^[21]

Keep in mind that the mortgage interest rates above represent estimates based on the national average APRs for all home loan types in the United States according to myFICO data. Lower interest rates could potentially be available for FHA loans and VA loans—especially for borrowers with good credit scores.

As you can see in the example above, having a FICO Score in the lowest credit score range (620-639) compared to a FICO Score in the highest range (760-850) could cost you an extra:

• $174 per month.
• $62,564 in overall interest charges.

But if you work to build your credit before you apply for a mortgage, you have the potential to save money both on a monthly basis and over the lifetime of your loan.

Bottom line

Your credit score can have a big impact on your ability to qualify for a mortgage and the price you pay for a home loan. So, if you’re considering a VA loan or an FHA loan, it’s helpful to understand the basic credit score requirements of these loan programs before you apply for financing. You can also ask your mortgage lender about its specific loan qualification requirements to avoid any surprises during the loan process.

FHA and VA loans are known for featuring more competitive interest rates compared to other types of home loans. And if you work to earn a good credit score, you might put yourself in a position to qualify for some of the best interest rates available.

Of course, no matter what type of mortgage you apply for it’s important to shop around and compare loan offers from multiple lenders. Whether you’re shopping for a VA loan, an FHA loan, or some other type of mortgage, comparing rates can help you make sure you find the best deal available for your situation.

Sources

1. VeteransUnited.com. “VA Loan Creit Score Minimums and Lender Requirements for 2025.” https://www.veteransunited.com/realestate/va-loans-and-credit-score-minimums-what-all-buyers-need-to-know/
2. RocketMortgage.com. “FHA Loans: Requirements, Loan Limits and Rates.” https://www.rocketmortgage.com/learn/fha-loans
3. RocketMortgage.com. “What Is a Conventional Loan?” https://www.rocketmortgage.com/learn/conventional-mortgage
4. HUD.gov. “Let FHA Loans Help You.” https://www.hud.gov/buying/loans
5. HUD.gov. “FHA Insurance, Section 232, and Lean.” https://www.hud.gov/federal_housing_administration/healthcare_facilities/residential_care/fha_insurance#:~:text=The%20lenders%20bear%20less%20risk,for%20the%20FHA%20Insurance%20Fund
6. Hometrust.com. “What’s the Max Debt-to-Income (DTI) Ratio for a Mortgage?” https://www.hometrust.com/clear-lake/kbabineaux/blog/whats-the-max-debt-to-income-dti-ratio-for-a-mortgage/#:~:text=Each%20Loan%20Type-,FHA%20Loans,the%20maximum%20DTI%20of%2057%25
7. QuickenLoans.com. “Using an FHA Loan for Investment Property: A Complete Guide.” https://www.quickenloans.com/learn/fha-loan-for-investment-property
8. RocketMortgage.com. “FHA Minimum Property Standards Checklist: What You Should Know.” https://www.rocketmortgage.com/learn/fha-minimum-property-standards
9. HUD.gov. “2025 Nationwide Forward Mortgage Loan Limits.” https://www.hud.gov/sites/dfiles/OCHCO/documents/2024-21hsgml.pdf
10. CaptialOne.com. “FHA vs. conventional loans: What’s the difference?” https://www.capitalone.com/learn-grow/life-events/fha-vs-conventional-loans/
11. Benefits.VA.gov. “About Home Loans.” https://www.benefits.va.gov/homeloans/
12. Benfits.VA.gov. “GI Bill—75th Anniversary Celebration.” https://benefits.va.gov/HOMELOANS/gibill_75.asp
13. VeteransUnited.com. “How Compensating Factors Can Boost Your Chances of Securing a VA Home Loan.” https://www.veteransunited.com/valoans/how-compensating-factors-can-boost-your-chances-of-securing-a-va-home-loan/
14. VA.gov. “VA funding fee and loan closing costs.” https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/#va-funding-fee-rate-charts
15. Benefits.VA.gov. “Loan Volume by State.” https://www.benefits.va.gov/HOMELOANS/lender_state_volume.asp
16. Chase.com. “What to know about VA loan appraisals.” https://www.chase.com/personal/mortgage/education/financing-a-home/va-appraisal
17. AmericanExpress.com. “What’s the Minimum Credit Score Needed to Get an FHA Loan?” https://www.americanexpress.com/en-us/credit-cards/credit-intel/fha-loan-credit-score/
18. QuickenLoans.com. “FHA Loan Credit Score Requirements: Everything To Know for 2023.” https://www.quickenloans.com/learn/fha-loan-credit-score
19. RocketMortgage.com. “What Is The Minimum VA Loan Credit Score For a Home Purchase Or Refinance?” https://www.rocketmortgage.com/learn/va-loan-credit-score
20. Equifax.com. “What Is a Credit Score?” https://www.equifax.com/personal/education/credit/score/articles/-/learn/what-is-a-credit-score/#:~:text=A%20credit%20score%20is%20a%20three%2Ddigit%20number%2C%20typically%20between,account%20for%20which%20you%20qualify
21. myFICO.com. “Loan Savings Calculator.” https://www.myfico.com/credit-education/calculators/loan-savings-calculator/

About the author

Michelle Lambright Black is a nationally recognized credit expert with two decades of experience. She is the founder of CreditWriter.com, an online credit education resource and community that helps busy moms learn how to build good credit and a strong financial plan that they can leverage to their advantage. Michelle's work has been published thousands of times by FICO, Experian, Forbes, Bankrate, MarketWatch, Parents, U.S. News & World Report, and many other outlets. You can connect with Michelle on Twitter (@MichelleLBlack) and Instagram (@CreditWriter).

Editorial policy

Our goal at Self is to provide readers with current and unbiased information on credit, financial health, and related topics. This content is based on research and other related articles from trusted sources. All content at Self is written by experienced contributors in the finance industry and reviewed by an accredited person(s).