FHA Adopts Methodology for Alternative Credit Scores

FHA recently issued Mortgagee Letter 2026-11 (ML 2026-11), updating its Minimum Decision Credit Score (MDCS) methodology to formally adopt VantageScore 4.0 and FICO Score 10T as acceptable credit score models alongside Classic FICO (see prior WBK coverage). These alternative models draw on trended data and non-traditional credit history, such as rent and utility payments, which, FHA states, will allow it to better quantify risk and expand access to homeownership.

FHA has published a range of implementation resources for industry participants, including the FHA Alternative Credit Scores Preparedness Guide, which addresses transition questions and adoption guidance, and the TOTAL Scorecard Developer’s Guide Release 5.0, which provides software mapping and technical specifications for integrating TOTAL Version 5.0.  FHA indicates the FHA Resource Center Knowledge Base will be updated concurrently with the release of TOTAL Scorecard Version 5.0 on January 1, 2027.

The new policy applies to all FHA-insured Title II Single Family programs for case numbers assigned on or after January 1, 2027, and will be folded into a forthcoming update to Handbook 4000.1.