FHA's New Credit Scores Start January 1, 2027: VantageScore 4.0 and FICO 10T, Explained

Published 2026-11-09 · eLoanTree Blog

For decades, a mortgage credit score meant one thing: Classic FICO. From January 1, 2027, FHA loans will accept two more models — VantageScore 4.0 and FICO Score 10T — alongside Classic FICO. FHA formalized the change in Mortgagee Letter 2026-11, published October 8, 2026, and reminded lenders about it in FHA INFO 2026-25 on November 4, 2026.

The change matters most for two groups: borrowers who have spent the last two years steadily paying down balances, and borrowers with thin credit files who have little traditional history. Both groups can look different — sometimes better — under a model that reads 24 months of payment trends instead of a single snapshot.

It does not change FHA's minimum credit score rules, its down payment rules, or its loan limits. And it does not guarantee anyone a loan. This article explains what the new models are, who they help, and what to do before January.

1. What FHA announced, and when it takes effect

On October 8, 2026, FHA published Mortgagee Letter 2026-11, "Updated Minimum Decision Credit Score Methodology for the Implementation of Alternative Credit Scores." It formalizes the addition of VantageScore 4.0 (V4) and FICO Score 10T (10T) for use as acceptable credit score models alongside Classic FICO.

The letter applies to Title II mortgage programs for FHA case numbers assigned on or after January 1, 2027. It also establishes guidance for determining the Minimum Decision Credit Score — the score that decides whether a borrower meets FHA's credit requirements — at the transaction level when multiple models are submitted.

On November 4, 2026, FHA issued FHA INFO 2026-25, a reminder that it will hold virtual office hour meetings with FHA staff to answer questions about the new models. The meetings run on selected dates from Monday, November 16, 2026 through Friday, January 15, 2027, each from 2:30 PM to 3:30 PM EST via Microsoft Teams.

The FHA move follows a joint announcement by the Federal Housing Finance Agency and HUD on April 22, 2026, approving the two models for mortgage underwriting. For conventional loans sold to Fannie Mae and Freddie Mac, VantageScore 4.0 was opened to all approved lenders on September 9, 2026, and the Enterprises published historical FICO 10T data on July 1, 2026 — but FICO 10T is not yet eligible for delivery to the Enterprises (FHFA, Credit Scores page, last updated October 2, 2026).

2. The three models side by side

Classic FICO reads your credit report as a single snapshot: what your balances are right now, what your utilization is right now, whether you have any current delinquencies. It has been the mortgage standard since the late 1990s.

VantageScore 4.0 and FICO Score 10T both use trended data — up to 24 months of payment, balance, and utilization history. The "T" in FICO 10T stands for trended. Instead of one snapshot, the model can see whether a $8,000 balance was $12,000 a year ago and is trending down, or whether it was $2,000 eighteen months ago and has been climbing. A borrower who has spent two years paying down balances can look better under a trended model than under a snapshot.

VantageScore 4.0 has a second difference: it can generate scores for thin-file borrowers with less than six months of traditional credit history, and it can incorporate rent, utility, and telecom payments when those are reported. That can bring previously unscorable consumers into the pool — though only when the payment data is actually reported to the bureaus.

All three models use the same 300–850 scale. A different model can move a borrower's score by a meaningful amount — industry commentary has put the swing at roughly twenty to forty points in either direction — but the direction depends on the borrower's own history. A rising balance trend can lower a score under the new models just as a falling trend can raise it.

3. Who could benefit — and who should not count on it

The clearest winners are borrowers with a two-year record of paying down revolving balances. Under Classic FICO, only today's balance matters. Under the trended models, the direction of travel counts — steady paydown is rewarded.

Thin-file borrowers are the second group. Someone with a short credit history, or with rent and utility payments that are reported, may be scoreable under VantageScore 4.0 when Classic FICO returns no score at all. That matters for first-time buyers, who are often younger and have less history.

But three cautions apply. First, lenders choose which models to use, and adoption varies — not every lender will offer the new models on January 1. Second, the new models are not easier by design: a borrower whose balances have been climbing for two years may score lower, not higher. Third, a credit score is only one part of underwriting. Income, debts, down payment, and the property itself still decide the loan.

4. What does NOT change

FHA's minimum credit score rules do not change. Under HUD Handbook 4000.1, a borrower with a 580 score can put 3.5% down, while a borrower with a 500–579 score must put 10% down. The new models change how the score is calculated, not the thresholds it is measured against.

The money difference between those two thresholds is large. On a $400,000 home, 3.5% down is $14,000 and 10% down is $40,000 — a $26,000 gap decided by the score. That is why a model change that moves a score by twenty or thirty points can matter so much for a first-time buyer.

FHA's 2026 loan limits do not change either: $541,287 is the low-cost floor and $1,249,125 is the high-cost ceiling for one-unit homes, per HUD Mortgagee Letter 2025-23. Mortgage insurance premiums (MIP) — the upfront premium and the annual premium — are unchanged by this announcement. And the new models do not change the occupancy rule, the appraisal rule, or any other FHA requirement.

5. What to do before January

First, keep paying down revolving balances — and keep them down. Trended data rewards a 24-month paydown pattern, so the history you build now is the history the new models will read in January.

Second, check your credit reports for errors now, while there is time to dispute them. A wrong balance or a wrongly reported late payment hurts under every model.

Third, if you rent, ask whether your rent payments are reported to the credit bureaus. They only help under the new models if they are actually in the file.

Fourth, if you plan to apply in early 2027, ask your lender which credit score models they will use for FHA loans — and whether your file would be scored under more than one. The answer varies by lender, and it can change your down payment by tens of thousands of dollars.

Finally, remember the date that matters: the new models apply to FHA case numbers assigned on or after January 1, 2027. A case number assigned in December 2026 stays under the old rules.