What’s the minimum credit score needed for an FHA loan in Michigan?

When it comes to qualifying for an FHA loan in Michigan, having a good credit score is one of the most crucial factors that mortgage lenders consider. 

If you plan on purchasing a house, you must wonder what the minimum credit score is to be eligible for an FHA loan. The Federal Housing Administration offers government-insured loans popular among individuals with poor credit scores and first-time homebuyers.

In this article, we’ll explore the minimum credit score requirements for FHA loans in Michigan and the benefits of applying for one.

Credit Score Requirement for FHA Loans

An FHA loan is an attractive option for first-time homebuyers since they have more lenient credit score requirements than conventional mortgages. In fact, the FHA lets homebuyers with credit scores as low as 500 be considered for home loans.

However, while the FHA sets guidelines for credit score minimums, lenders may impose stricter requirements to minimize their risk.

Although FHA lenders may adhere to the guideline set by the FHA, having a stellar credit score can still benefit homebuyers who want to take out an FHA loan. 

A higher credit score can help you secure better terms, like a lower down payment requirement, for instance. Plus, an exceptional credit score will make you eligible for better mortgage rates, which results in huge savings over the life of the mortgage.

Before applying for an FHA loan, we suggest you use an FHA down payment calculator to determine the amount you need to save for the loan's down payment.

Benefits of FHA Loans

Low Down Payment Requirements

A significant benefit of an FHA loan is its low down payment requirement. Contrary to traditional beliefs about down payment requirements, you’re not required to make a 20% down payment to purchase a home. With an FHA loan, you can attain homeownership with only a 3.5% down payment.

Lenient DTI Requirements

FHA loans offer homebuyers more leniency in meeting their debt-to-income (DTI) ratio requirements for qualification. The specific DTI requirements may vary depending on other compensating factors, such as your FICO score and available cash reserves.

Low FHA Rates

FHA loans offer some of the lowest interest rates in the mortgage industry, particularly for individuals with a credit score below 650. Since FHA loans are backed by the FHA and come with mortgage insurance, lenders perceive less risk and can provide loans with better interest rates.

If you need help estimating your potential monthly FHA payments and determining how much you can afford to borrow, use our FHA loan calculator for Michigan.


If you’re a first-time homebuyer or you have a poor FICO score, an FHA loan can be an excellent option for attaining homeownership in Michigan. With proper planning and credit management, you can boost your chances of securing an FHA loan and purchasing your dream home in Michigan.

Work with Reliance Financial Group of Michigan today if you’re ready to apply for an FHA loan.

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.