The borrower is not eligible for FHA-insured financing if the Minimum Decision Credit Score (MDCS) is less than 500.

If the MDCS is between 500 and 579 the borrower is limited to a maximum LTV of 90%. If the MDCS is at or above 580 the borrower is eligible for maximum financing.

The lender must downgrade and manually underwrite a mortgage that received an Accept recommendation if only the non-occupying co-borrower has a credit score.  Borrowers with non-traditional or insufficient credit histories are eligible for maximum financing, but must be manually underwritten using the procedures in Handbook 4000.1 II.A.5.

The MDCS refers to:

  • the credit score reported on the borrower’s credit report when all reported scores are the same.
  • the lowest score where two differing scores are reported.
  • the middle score where three differing scores are reported.

An MDCS is determined for each borrower. Where the mortgage involves multiple borrowers, the lender must determine the MDCS for each borrower, and then select the lowest MDCS for all borrowers.

Where the mortgage involves multiple borrowers and one or more of the borrowers do not have a credit score (non-traditional or insufficient credit), the lender must select the lowest MDCS of the borrower(s) with credit score(s).

The lender must review the credit report to determine the borrower's MDCS, except for mortgages to be insured under Sections 247 and 248.