FHA to add VantageScore, FICO 10T in January

The Federal Housing Administration (FHA) is expected to launch two new credit score models in January 2027. Industry sources told HousingWire that VantageScore 4.0 and FICO 10T will be introduced alongside the existing Classic FICO product.

This follows an April announcement from the U.S. Department of Housing and Urban Development (HUD). The department confirmed the FHA would adopt the newer models as part of a credit score modernization effort.

During a call with lenders this week, FHA representatives indicated the new options will be available for case files dated on or after January 2027. Lenders will be permitted to deliver loans using any of the three approved models.

Model Consistency Rules

Lenders expect a key rule will accompany the rollout. Model consistency will be required at the individual loan level.

This means lenders cannot mix different credit score models across co-borrowers on the same mortgage application. For example, one borrower could not be assessed using VantageScore 4.0 while another on the same file uses FICO 10T.

"You have to have model consistency with your borrowers in the same application, which I think makes some sense. It limits the gaming there," a person familiar with the discussions said.

Classic FICO Remains Available

A significant detail emerged from FHA's conversations with industry participants. The agency has indicated it will not sunset the Classic FICO model as part of this update.

"Creditworthy borrowers applying for an FHA loan will be able to choose between FICO Score 10T and VantageScore 4.0 in addition to Classic FICO," a HUD spokesperson stated. The spokesperson added that the new trended credit models will provide a more complete view of borrower creditworthiness.

Mortgage executives say this decision aligns with secondary market conditions. Many mortgage-backed securities are still collateralized and traded based on Classic FICO scores. An abrupt retirement of the legacy model could negatively affect "bond liquidity," one executive warned.

Implementation and Pricing Impact

The FHA rollout is expected to apply to all lenders simultaneously at launch. This differs from the conventional market overseen by the Federal Housing Finance Agency (FHFA), which has followed a more staggered implementation approach.

The pricing impact for FHA loans is expected to be more limited than in the conventional market. FHA generally does not use credit score and loan-to-value matrices to vary base pricing for individual borrowers in the same way Fannie Mae and Freddie Mac do with loan-level price adjustments (LLPAs).

Instead, FHA's economics are driven primarily through its upfront and annual mortgage insurance premiums (MIPs). The agency is moving toward the year-end rollout as committed in its April announcement.