According to HousingWire, the FHA is preparing to roll out new credit scoring options starting in January 2027. Borrowers applying for FHA loans will be able to choose between two newer models, VantageScore 4.0 and FICO 10T, alongside the existing Classic FICO that lenders have been using all along. This modernization effort has been in the works since the Department of Housing and Urban Development announced the plan earlier this year.
Here's an important detail that came up during recent conversations between FHA officials and lenders: whichever credit model a lender chooses for a particular loan file, they have to stick with it across all borrowers on that application. You can't mix and match different models between co-borrowers on the same mortgage. According to sources familiar with these discussions, this consistency requirement makes sense because it prevents lenders from shopping around for the most favorable score across different models, which could artificially inflate borrower profiles.
What stands out to me is that FHA is not retiring Classic FICO despite bringing in these new options. The agency plans to keep all three models available going forward. According to mortgage industry executives quoted in the reporting, this decision actually makes practical sense because the secondary mortgage market still relies heavily on Classic FICO for valuing mortgage-backed securities, and an abrupt shift could disrupt bond trading and liquidity.
The pricing impact of this change is expected to be relatively modest for FHA loans compared to conventional mortgages. Unlike Fannie Mae and Freddie Mac, which adjust interest rates and fees based on individual borrower credit scores through loan-level pricing adjustments, FHA handles its economics differently through mortgage insurance premiums rather than credit-based pricing variations.
What I am seeing locally is that Bay Area lenders are already preparing for this transition, and it should ultimately provide qualified borrowers with more options when seeking FHA financing. For East Bay and Fremont buyers who might not have perfect conventional loan profiles, having these additional credit models in the mix could mean better approval odds or potentially more competitive pricing depending on which scoring model works best for their situation.
