AWACSMortgage compliance intelligence from Flightline

FHA · Mortgagee Letter ML 2026-11 · Published

Updated Minimum Decision Credit Score Methodology for Alternative Credit Scores

Mortgagees submitting multiple credit score models must use the same model type(s) across all borrowers on a transaction, follow a revised methodology to calculate borrower-level scores and MDCS, and retain all submitted model types on the credit report. FHA adopts FICO 10T and VantageScore 4.0 alongside Classic FICO, while removing MDCS references from HECM guidelines.

Action requiredCase numbers assigned on or after Jan 1, 2027Checks passed· adjusted automaticallyRead the letter ↗ (opens in a new tab)

Loan impact

From the letter text · verified

Applies to: Applies to all FHA-insured Title II Single Family forward mortgage programs.

Applies when all of these are true
  • ANDFHA loan
  • ANDCase number date on or after January 1, 2027
Addressed to
All FHA-Approved Mortgagees
Investor
FHAFrom the publisher, not quoted from the text
Programs
FHAFrom the publisher, not quoted from the text
Affected areas
Report; Score; Credit score modelGuide Section II.A.1.b.ii(A)(3)
Affected documents
Credit report; case binder
Exceptions
Home Equity Conversion Mortgage (HECM) program
Effective
Case numbers assigned on or after Jan 1, 2027
Applicability confidence
Verified: every row taken from the source text is supported by it; rows marked "from the publisher" are not quoted
Supporting quotes from the letter
  • conditions“The provisions of this ML are effective for case numbers assigned on or after January 1, 2027.”
  • exceptions“The Home Equity Conversion Mortgage (HECM) program does not rely on credit scores as an underwriting component.”
  • affected areas“A Credit Score Model Type refers to a credit scoring model (e.g. Classic FICO, VantageScore 4.0, or FICO 10T) on a credit report that contains scores from the credit repositories for a Borrower.”
  • affected areas“The credit report retained in the case binder must include all Credit Score Model Type(s) submitted in the final TOTAL submission.”
  • guide sections“All updates will be incorporated into a forthcoming update of the HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook (Handbook 4000.1).”
  • affected documents“The credit report retained in the case binder must include all Credit Score Model Type(s) submitted in the final TOTAL submission.”

What changed

From the letter text · Sections II.A.1.b.ii(A)(3)(b)(ii), II.A.1.b.ii(A)(3)(b)(i), II.B.2.b.ii(A)(8)
RequirementPreviouslyNow
Credit Score Model Type consistency across borrowersNewRequiredSection II.A.1.b.ii(A)(3)(b)(ii)New requirementWhen submitting one or more Credit Score Model Types, the same model types must be used for all borrowers on the transaction.
Minimum Decision Credit Score calculation methodologyChangedRequiredSection II.A.1.b.ii(A)(3)(b)(i)Not statedMortgagees must determine the Borrower-Level Score by selecting the middle score if three differing scores are reported, the lowest score if two differing scores are reported, or the single score, with the Borrower-Level Score being the lowest score across submitted model types, and the MDCS being the lowest Borrower-Level Score among all Borrowers.
Credit report retention in case binderNewRequiredSection II.A.1.b.ii(A)(3)(b)(ii)New requirementThe credit report retained in the case binder must include all credit score model types submitted in the final TOTAL submission.
Submission of one or more Credit Score Model TypesRelaxedSection II.A.1.b.ii(A)(3)(b)(ii)Not statedThe Mortgagee may submit one or more Credit Score Model Type(s).
Tri-merge credit report and score threshold continuationClarifiedNot statedFHA will continue to require a tri-merge credit report, and the existing minimum credit score thresholds remain unchanged regardless of Credit Score Model Type.
HECM Minimum Decision Credit Score eligibility referenceRemovedSection II.B.2.b.ii(A)(8)Not statedReference to the MDCS is removed from general eligibility requirements for the HECM program.

Each change applies when all the loan-impact conditions above are true.

Also affected: Sections II.A.1.b.ii(A)(3), II.A.2.b.i, II.A.5.d.viii, II.A.8.a.x(A), II.A.8.b.ii(A)(3), II.A.8.d.vi(C)(1), II.A.8.o.vi(A).

What to do

AWACS interpretation · not source language

What to review: Review the updated Minimum Decision Credit Score calculation rules, the requirement to use uniform credit score model types across all borrowers on a transaction, and the credit report retention mandate effective for case numbers assigned on or after January 1, 2027.

Underwriting

For case numbers assigned on or after January 1, 2027, submit identical credit score model types across all borrowers on a transaction, calculate the borrower-level score and MDCS using the revised methodology, and retain in the case binder a credit report containing all model types submitted in the final TOTAL submission.

QC implications

  • Sample loan files with case numbers assigned on or after January 1, 2027, to confirm that all borrowers on a transaction share identical credit score model types.
  • Verify that the borrower-level score and MDCS calculations follow the required middle, lowest, or single score selection methodology across all submitted credit score models.
  • Check that the credit report preserved in the case binder includes every credit score model type submitted in the final TOTAL submission.

Source and record

Version 1 · archived

Checks

  • Source verified: Passed

    The document ID, link and publication date match the official source.

  • Quotes match the source: Passed, adjusted automatically

    Every quoted passage appears word for word in the official document.

    • A detail the source does not support was removed or adjusted

  • Requirements backed by the source: Passed

    Anything marked required is backed by the requirement language and dates in the source.

  • In scope: Passed

    The document is about residential mortgage lending.

  • Format and labels: Passed

    The record follows the AWACS format and uses its standard labels.