What is the minimum qualifying credit score for an FHA mortgage with a 3.5% down payment?

The minimum qualifying credit score for an FHA mortgage with a 3.5% down payment is established at 580. This score allows borrowers to take advantage of the lower down payment requirement, which is one of the attractive features of FHA loans. The rationale behind this threshold is to ensure that borrowers have a reasonable credit history and the ability to repay the loan, while still being accessible to individuals with less-than-perfect credit.

FHA loans are designed to promote homeownership among a wider range of applicants, including first-time homebuyers and those with low to moderate incomes. By setting the credit score requirement at 580 for the 3.5% down payment, the FHA aims to strike a balance between mitigating risk to lenders and encouraging home purchases among those who may face difficulties qualifying for conventional loans with stricter credit criteria.