The Federal Housing Administration today published a mortgagee letter to formalize the use of VantageScore 4.0 and FICO Score 10T alongside Classic FICO to assess the creditworthiness of single-family mortgages, with the new policy taking effect at the start of the coming year.
In April, the Department of Housing and Urban Development and the Federal Housing Finance Agency announced the adoption of the two alternative credit scoring models alongside Classic FICO for FHA loans.
The mortgagee letter, which applies to Title II mortgage programs for FHA case numbers assigned on or after Jan. 1, 2027, establishes guidance for determining the Minimum Decision Credit Score, or MDCS, at the transaction level when multiple models are submitted, according to the agency.
FHA said the existing MDCS thresholds of 500, 580 and 620 will continue to apply under the new framework. The agency also noted that lenders may submit Classic FICO, VantageScore 4.0 and FICO Score 10T to FHA’s TOTAL Scorecard beginning Jan. 1, but any score model submitted must independently receive an “accept” recommendation for a loan to obtain an overall Accept decision.
FHA noted that it will continue to require three credit reports for single-family loans after the policy change goes into effect.
The agency has developed a preparedness guide to assist stakeholders with implementation.
