FHA Mortgagee Letter 2026-11: The Lowest Score Model Will Decide

The rule is spread across four FHA documents: the Mortgagee Letter, Handbook 4000.1, the Preparedness Guide and the Q&A.

FHA's Q&A prints a two-borrower example with three models, labelled only Score Model Type 1, 2 and 3. It does not say which label belongs to which model, so I keep FHA's labels. I am Borrower 1. The file is FHA's illustration, with no real applicant behind it, and it forecasts no one's result.

My scores, in Experian, Equifax, TransUnion order:

• Model Type 1: 580, 620, and no score at TransUnion
• Model Type 2: 610, 650, 600
• Model Type 3: 600, 640, 620

Step one works inside each model. FHA's shorthand is "Middle of three, lower of two, one of one." Model Type 2 has three scores, so it yields the middle one, 610. Model Type 3 yields 620. Model Type 1 has only two, so the lower one stands: 580.

Step three works across people. Borrower 2 has model scores of 640, 670 and 655, which makes a Borrower-Level Score of 640. The MDCS is the lowest Borrower-Level Score among all borrowers on the transaction: the lower of 580 and 640, which is 580. FHA's example has eighteen boxes, seventeen of them holding a score, and the MDCS comes from one of them: the Experian score in the weakest model on the weaker file.

Step two takes a minimum, and a minimum can only hold or fall as scores are added to the set. With one model submitted, that model's selected score is the Borrower-Level Score. Add a second, and no score in it, however high, can move the result up. My 620 from Model Type 3 is on the report and still loses to 580.

If Model Type 2 alone were submitted for both of us, step one would give me 610 and Borrower 2 670, and the MDCS would be 610, thirty points above 580. FHA does not print that case. I worked it out from FHA's numbers, and it says nothing about how any lender would or should choose. It shows the direction of the arithmetic: a file read through fewer models cannot come out lower than the same file read through all of them.

It takes two documents to work out what the 580 line costs.

The Mortgagee Letter sets out the tiers, in its text for Handbook section II.A.2.b.i. An MDCS below 500 is not eligible for FHA-insured financing. Between 500 and 579, the transaction is limited to a maximum loan-to-value of 90%. At or above 580, it is "eligible for maximum financing." The letter states no down-payment figure. It also says the existing minimum credit score thresholds remain unchanged regardless of model type, so no line has moved.

The purchase figure comes from Handbook 4000.1: a maximum loan-to-value of 96.5 percent of the Adjusted Value, with a Minimum Required Investment of at least 3.5 percent.

On an Adjusted Value of $300,000, 3.5 percent is $10,500. A 90% cap means at least 10 percent down, or $30,000. The gap is $19,500. On $250,000 the figures are $8,750 and $25,000, a gap of $16,250.

My example file lands exactly on 580, and "at or above" includes 580. Suppose the Experian score in Model Type 1 read 579 instead, a hypothetical of mine that FHA does not print. Steps one and two would both give 579, and the transaction would drop to the 90% tier while my other two models still read 610 and 620. On $300,000, one point at one bureau in one model would separate a $10,500 minimum from a $30,000 one.

These are FHA's thresholds for insuring a loan. They do not say that any lender will approve a file at 500 or 580, and these documents do not cover what an individual lender requires.

TOTAL Scorecard is the second place where an extra model can count against a file. The Preparedness Guide and the Q&A cover it, and the Mortgagee Letter does not.

The Guide says all credit score models submitted to TOTAL must receive an Accept recommendation for the final result to be an Accept, and that if any one receives a Refer, the final recommendation will be a Refer. As with the MDCS, the weakest model submitted sets the outcome. A Refer does not end the file: the Q&A says a referred loan can be manually underwritten under current requirements, including the MDCS thresholds, and 580 appears in the letter's manual ratio matrix too. Below 580, qualifying ratios may not exceed 31/43, or 33/45 for Energy Efficient Homes. At 580 and above they can reach 37/47, 40/40 or 40/50 under the conditions the letter lists.

The same two documents say that the established MDCS thresholds of "500, 580, and 620" also apply to the new models, and that line is easy to misread. Neither says what 620 governs, and the Mortgagee Letter never mentions 620. In the Handbook, an MDCS of 620 appears as a requirement in one narrow place. A lender may indicate a Positive Rental Payment History to TOTAL only if the transaction is a purchase, at least one borrower is a first-time homebuyer, the MDCS is 620 or greater, and at least one borrower has documented rent payments of $300 or more for the previous 12 months.

The rental-history rule makes 620 a condition for one indicator, not a minimum score for an FHA loan. These documents do not say whether 620 does anything else inside TOTAL. On my example file the condition would fail: one model score is 620, but the Handbook names the MDCS, and the MDCS is 580.

The lender chooses the models. The letter's sentence is: "The Mortgagee may submit one or more Credit Score Model Type(s), provided the same model type(s) are used for all Borrowers." The Q&A adds that FHA does not recommend a particular model type, and the Guide observes that lenders may prefer to submit a single model for all borrowers.

Nothing in these documents lets a borrower pick a model, and nothing says a file will be scored on its best one. They say that the mortgagee decides which model types go in, the same ones for everyone on the loan, and that whatever goes in faces the lowest-across-models step and the every-model-must-Accept rule.

The tri-merge credit report stays. FHA will continue to require one, and the Q&A says the mortgagee must obtain it from an independent consumer reporting agency. The report kept in the case binder must include every model type submitted in the final TOTAL submission.

The MDCS review does not apply to Streamline Refinances, Assumptions, or mortgages insured under Sections 247 and 248. On refinances it does cover, the top tier is 97.75% and the 500-to-579 tier is again 90%. A borrower with no score at all is eligible for maximum financing but must be manually underwritten.

Near 500 or 580, you have two questions for the loan officer and one check of your own.

Ask the loan officer when the FHA case number will be assigned. The new method attaches to case numbers assigned on or after January 1, 2027. The Q&A says a mortgagee may cancel an existing case number and order a new one on or after that date to submit with the new models. Whether to do that is the lender's decision.

In FHA's example, three models, three bureaus and two borrowers come down to an MDCS of 580, the lower of the two scores Model Type 1 returned on my file. Steps two and three both take the lowest number, so another submitted model cannot move the result up.

Mortgagee Letter 2026-11 leaves 500 and 580 where they were and keeps the tri-merge. The choice of models is the lender's.

FHA's stated reason for adding the models, in the letter's Background, is that they use trended data and non-traditional credit like rent and utilities and so "provide greater predictive power." That is FHA's description, and the letter does not say whether any particular file reads higher under them.

For a borrower near 580 whose FHA case number is assigned on or after January 1, 2027, the tier will depend on the scores in the three bureau reports and on which models the lender submits.

1. When will FHA Mortgagee Letter 2026-11 take effect?

The letter is dated October 8, 2026 and is effective for FHA case numbers assigned on or after January 1, 2027. It applies to all FHA-insured Title II Single Family mortgage programs. Until that date, FHA's Preparedness Guide tells mortgagees to keep using the existing credit report guidance in Handbook 4000.1.

2. How will FHA choose one credit score when a lender submits several models?

The letter uses three steps. Within each Credit Score Model Type, the lender takes the middle of three differing bureau scores, the lowest of two, or the only score. For each borrower, the Borrower-Level Score is the lowest of those selected scores across the models submitted. The Minimum Decision Credit Score is then the lowest Borrower-Level Score among all borrowers on the transaction.

3. Can submitting more score models push the deciding score higher on an FHA loan?

No. The rule takes the lowest score across the models submitted, so an added model can leave the Minimum Decision Credit Score where it was or lower it, but cannot move it up. In FHA's own example, model scores of 580, 610 and 620 produce a Borrower-Level Score of 580.

4. Who decides which credit score model is used on an FHA loan?

The lender. The letter says the mortgagee may submit one or more Credit Score Model Types, provided the same model type or types are used for all borrowers. FHA's Q&A says FHA does not recommend a particular model type. Nothing in the documents lets a borrower choose the model.

5. What do the 500 and 580 thresholds mean for an FHA down payment?

Under the letter, a Minimum Decision Credit Score below 500 is not eligible for FHA-insured financing, 500 to 579 is limited to a maximum loan-to-value of 90%, and 580 or above is eligible for maximum financing. Handbook 4000.1 sets the purchase maximum at 96.5 percent of the Adjusted Value with a Minimum Required Investment of at least 3.5 percent. On a $300,000 Adjusted Value that is $10,500 against $30,000. These are FHA's thresholds for insuring a loan, and they do not say what any lender will approve.

6. Is 620 the minimum credit score for an FHA loan?

No. The Mortgagee Letter does not mention 620. FHA's Preparedness Guide and Q&A list thresholds of 500, 580 and 620 without saying what 620 governs. In Handbook 4000.1, an MDCS of 620 or greater is one condition for indicating a Positive Rental Payment History to TOTAL Scorecard, along with a purchase transaction, a first-time homebuyer, and documented rent of $300 or more for the previous 12 months.

7. Will FHA still require a tri-merge credit report?

Yes. The letter says FHA will continue to require a tri-merge credit report, and the Q&A says the mortgagee must obtain one from an independent consumer reporting agency. The report kept in the case binder must include every model type submitted in the final TOTAL submission.

8. What happens if one score model gets a Refer in TOTAL Scorecard?

According to FHA's Preparedness Guide, every credit score model submitted to TOTAL must receive an Accept for the final result to be an Accept, and a Refer on any one model makes the final recommendation a Refer. The Q&A says a referred loan can be manually underwritten under current requirements, including the established MDCS thresholds.