Earlier this month, the Federal Housing Administration (FHA) published Mortgagee Letter (ML) 2026-11, Updated Minimum Decision Credit Score Methodology for the Implementation of Alternative Credit Scores, to formalize the addition of VantageScore® 4.0 (V4) and FICO® Score 10T (10T) as acceptable credit score models alongside Classic FICO®. The ML is effective for case numbers assigned on or after January 1, 2027.1
The ML largely tracks the guidance that the FHA previewed in September, preserving the general principle that a lender may choose, on a loan-by-loan basis, which approved credit score model to use, with one significant nuance that we discuss below.2
Status Quo Notes
The ML keeps the tri-merge credit report requirement and the existing minimum credit score thresholds. Unlike the Enterprises, the FHA does not adjust minimum credit scores based on the selected model. Put simply, there is no VantageScore "haircut" of the kind that appeared in early (now obsolete) Enterprise loan-level price adjustment grids.
What the FHA Did in the ML
The ML allows a mortgagee to submit "one or more Credit Score Model Type(s)," provided the same model type is used for all co-borrowers on the transaction. The FHA further provides that when multiple score models are submitted, the borrower's final score becomes the lowest score among the submitted models.
The FHA requires only that, if multiple models are submitted, the lowest submitted score controls. The FHA does not require lenders to submit every available score model, and nothing in the guidance requires a lender that pulls multiple scores to submit the lowest one to TOTAL.
The Nuance Worth Noting
The nuance lies in the ML's documentation requirements. The ML provides that "[t]he credit report retained in the case binder must include all Credit Score Model Type(s) submitted in the final TOTAL submission. The credit report may include additional Credit Score Model Types that were not submitted to TOTAL" (emphasis added). It further provides that "[i]f VantageScore 4.0 and FICO 10T are submitted in the final TOTAL submission, the credit report retained in the case binder must include both VantageScore 4.0 and FICO 10T but may also include Classic FICO."
The FHA has expressly authorized loan-by-loan model selection (referred to here as "Lender Choice"), and by distinguishing between "available" and "submitted" scores, it contemplates that unsubmitted models may appear in the retained documentation. However, the FHA has not addressed the consequences, if any, of an unsubmitted model appearing in that documentation.
To be clear, the ML does not require a lender that selects among models to keep the unused scores in the case binder. Even so, the distinction between "available" and "submitted" scores may matter in practice. The open question is what documentation, if any, a lender must maintain when it selects one approved credit score model over another for a particular loan or the practical and legal significance when the tri-merge report includes unused credit scores.
Consider a Lender Choice lender that pulls credit reports showing for a single borrower a classic FICO of 572, a FICO 10T of 579 and a VantageScore 4.0 of 604.3
Such a lender would likely select the VantageScore 4.0 score of 604 for the final TOTAL submission. In doing so, the borrower qualifies for maximum financing rather than the 90 percent loan-to-value cap that would have applied under the Classic FICO or 10T score (because the maximum-financing threshold is 580 regardless of model). That is permissible under the ML. However, because the ML permits unsubmitted scores to remain in the retained credit report, FHA reviewers may see them.
So, while the FHA clearly permits loan-by-loan model selection and contemplates unsubmitted models appearing in retained documentation, it is not clear what legal or practical significance, if any, those unsubmitted scores carry after endorsement.
The FHA should clarify that, where a mortgagee submits a score from an approved model, the existence of a different score from another approved model that was not part of the final TOTAL submission does not, standing alone, affect the Minimum Decision Credit Score (MDCS) determination or create a basis for post-endorsement enforcement or indemnification.
Ideally, updates to the FHA's indemnification framework will follow. That is likely where the proverbial rubber meets the road in helping lenders plan how to implement alternative credit scores, set operational documentation standards, and decide whether to adopt Lender Choice or become a single-score lender.
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1 The FAQs were also updated on October 8, 2026. Two notable FAQs are: (1) "Does FHA require a minimum credit score and how is it determined?" available here and (2) "What are the FHA Minimum Decision Credit Score (MDCS) requirements?" available here.
2The FHA Alternative Credit Scores Preparedness Guide," issued on September 10, 2026, has now been superseded by the ML. A copy of the document is still available here.
3 By "Lender Choice," we refer to the ability of a lender to choose among approved credit score models on a loan-by-loan basis.