Does FHA Use VantageScore for Mortgages?

The Federal Housing Administration (FHA) is a government agency that provides mortgage insurance on loans made by FHA-approved lenders. FHA mortgage insurance protects lenders against losses if a borrower defaults on their mortgage. Many homebuyers turn to FHA loans because they require lower down payments and credit scores compared to conventional mortgages. But there is some confusion around which credit scoring models FHA uses to qualify borrowers. So does FHA use VantageScore for mortgages?

A Brief History of Credit Scoring and FHA

Before we dive into whether FHA uses VantageScore let’s provide some background. FHA has been providing mortgage insurance since 1934 to promote affordable homeownership. For decades FHA relied predominantly on FICO credit scores to assess a borrower’s creditworthiness.

FICO scores range from 300 to 850 and were long considered the industry standard for mortgage lending. But over time, concerns emerged that FICO scores excluded too many creditworthy borrowers, especially those with limited credit histories.

This set the stage for new competitors like VantageScore to emerge. Launched in 2006, VantageScore was developed jointly by the three major credit bureaus – Equifax, Experian, and TransUnion.

VantageScore aimed to be more inclusive by using alternative data sources to generate scores for people with thin or no credit files. It also aligned its scoring range of 300-850 with FICO to facilitate adoption.

FHA Approves VantageScore Mortgages

For over a decade, FHA relied solely on FICO for credit scoring. But in late 2018, FHA proposed allowing lenders to use VantageScore 3.0 in addition to FICO for certain loans. Then in April 2019 FHA officially began permitting VantageScore for FHA loans under certain conditions.

This was a major milestone that significantly expanded FHA’s credit scoring options beyond just FICO. Under Mortgagee Letter 19-04, FHA allowed lenders to use VantageScore 3.0 for:

• Manually underwritten loans
• Streamlined refinances without an appraisal

For both types of loans, borrowers must have a minimum VantageScore of 620. FHA placed additional restrictions on using VantageScore, including:

• No delinquent federal debt in the last 12 months
• No Chapter 7 or 13 bankruptcies in the last 2 years
• At least one VantageScore from the last 2 years

By approving VantageScore, FHA opened access to FHA mortgages to millions more creditworthy borrowers. This aligned with FHA’s mission of affordable homeownership.

Current FHA Credit Score Requirements

Since initially approving VantageScore in 2019, FHA has expanded its permissible use for FHA loans. As of 2025, here are the current FHA credit scoring requirements:

Manually Underwritten Loans

For manually underwritten FHA loans, lenders can use either:

• FICO scores of at least 580
• VantageScores of at least 620

Borrowers must meet the additional criteria around bankruptcies and federal debt.

Streamlined Refinances

For streamlined refinances without an appraisal, FHA allows:

• FICO scores down to 500
• VantageScores as low as 540

Borrowers must have an existing FHA loan and meet FHA’s refinance seasoning requirements.

Automated Underwriting Systems

For loans run through FHA’s Total Mortgage Scorecard automated underwriting system, FHA requires:

• Minimum FICO scores of 580

At this time, FHA does not permit VantageScore models for loans processed through its automated system. Only FICO scores are accepted.

The Benefits of FHA Using VantageScore

FHA’s adoption of VantageScore provided several notable benefits:

• Increased homeownership opportunities – By scoring consumers with limited credit histories, FHA expanded access to mortgage financing to millions more underserved families.

• More competition and choice – Having both FICO and VantageScore as options prevents overreliance on a single scoring model and encourages competition and innovation.

• Consistent underwriting standards – Allowing lenders to use just one cutoff score (620+ for VantageScore) simplified underwriting compared to FICO’s multiple tiers.

• Minimal added risk – Analysis showed that loans to borrowers with VantageScores from 620-650 perform similarly to those with comparable FICO scores.

The Future of Credit Scoring at FHA

While FHA now permits VantageScore in certain scenarios, the majority of FHA loans still rely on FICO scoring models. But this could change in the coming years.

In 2022, FHA began assessing whether to allow additional VantageScore models for its automated underwriting system. FHA may also consider reducing its 620 VantageScore cutoff to expand approvals.

Regulatory pushes toward more modern scoring models could accelerate FHA’s adoption of VantageScore. This would align with FHA’s mission of providing sustainable homeownership opportunities to underserved communities.

As pressure mounts for housing finance to modernize its approach to credit scoring, we could see FHA lean further into VantageScore in the future. But for now, borrowers have more credit scoring options than ever before when applying for FHA financing.

To purchase a $300,000 house, the minimum credit score typically needed is 620 for a conventional loan. However, some loans like FHA loans may have lower minimums, like 580 with a 3.5% down payment, or even 500 with a 10% down payment.