MBA Chart of the Week: Credit Score Distribution of FHA Single-Family Endorsements

Since 2011, distribution of credit scores for newly endorsed FHA insured single family mortgages has begun to return to a pattern closer to historic norms.   

The share of FHA loan endorsements to borrowers in the 720 to 850 credit score range decreased to 18.3 percent of endorsements from an abnormally high 38 percent share in first quarter 2011. At the same time, the share of borrowers in the 640 to 679 score category increased.    

Since 2013, the share of endorsements for loans to borrowers in the 500 to 619 and 620 to 639 categories has also grown. Last year saw a slight resurgence among 720 to 850 borrowers following FHA’s reduction of the annual mortgage insurance premium, but this increase in share appears to be subsiding.  

Overall, the average credit score has trended downward from 700 in 2011 to around 680 thus far in 2016 for all fully underwritten loan purposes–purchase, as well as conventional-to-FHA and FHA-to-FHA refinances. We estimate that FHA’s share of total originations has declined to 15 percent from its post-recession peak of 21 percent as FHA’s counter-cyclical role in the market has receded.  

To view the Chart of the Week, click https://www.mba.org/news-research-and-resources/forecasts-data-and-reports/forecasts-and-commentary/chart-of-the-week.  

(Lynn Fisher is vice president of research and economics with the Mortgage Bankers Association; she can be reached at lfisher@mba.org. Joel Kan associate vice president of economic forecasting with MBA; he can be reached at jkan@mba.org.)