Did you know that with a credit score as low as 500, it’s still possible to get an FHA loan? Yes, that’s correct – even with a lower credit score, you might qualify for an FHA loan. This can help you achieve your dream of owning a home.
An FHA loan is backed by the Federal Housing Administration. It helps people with lower credit scores get home loans. While it’s a great option, there are a few things to keep in mind. You might face a higher interest rate and need to put down at least 10%. Still, it opens the door for homebuyers with a credit score of 500.
Key Takeaways:
- Despite having a credit score as low as 500, you can still qualify for an FHA loan.
- However, be aware that there are some drawbacks to getting an FHA loan with a lower credit score, including higher interest rates and a larger down payment requirement.
- Most lenders, like Rocket Mortgage, prefer a minimum credit score of at least 580 for FHA loan approval.
- It’s important to consult with a mortgage lender to understand the specific credit score requirements and eligibility criteria for an FHA loan.
- Remember that FHA loans offer different types of financing options, such as purchase loans, refinances, and renovation loans.
FHA Loan Credit Score Requirements

Getting an FHA loan means your credit score really matters. Different lenders look at credit scores in their own way. It’s key to know the basics before you apply.
For the best chance at an FHA loan, aim for a credit score of 580 or more. With a score in this range, you might get better loan terms.
If your score is between 500 and 579, you can still apply for an FHA loan. But, you might only get a 90% loan-to-value (LTV) ratio. Getting an FHA loan with a credit score under 500 is tough, and usually not recommended. Lenders see these scores as risky.
It’s worth mentioning that credit scores matter a lot, but other things could help too. If you have an unusual credit history or little credit, don’t give up. Talking to a mortgage lender can shed light on your options.
An FHA loan opens the door for those with not-so-great credit to own a home. Knowing what credit scores are needed helps you get ready to apply. It’s a big step towards making your dream of owning a home come true.
FHA Loan Credit Score Requirements
Credit Score Range | Loan-to-Value (LTV) Ratio |
---|---|
580 or higher | Maximum financing available |
500 – 579 | 90% LTV ratio |
Below 500 | Generally not eligible |
Types of FHA Loans
FHA loans give you different ways to finance your home. The FHA purchase loan is the most usual. You can buy a home with only 3.5% down if your FICO® Score is 580 or more.
If you already have a loan, check out the FHA rate-and-term refinance. It lets you get a new loan with lower rates or better terms. This means you can adjust your loan to help with your money goals.
FHA streamline refinances make refinancing easier. They need less paperwork and have lower insurance rates. This makes refinancing your home simpler and cheaper.
Thinking of a cash-out refinance? This FHA loan lets you get cash from your home’s equity. You can use this cash for upgrading your home, paying off debts, or anything else you need.
Want to buy a home and fix it up? The FHA 203(k) loan is perfect. It covers the purchase and renovation costs in one loan.
Keep in mind, each FHA loan type has its own rules. It’s smart to look into them and talk to a mortgage lender. They can help find the best option for you.
Can I Qualify for an FHA Loan with a Credit Score of 500?
Yes, it is possible to get FHA approval with 600 credit. While the official minimum credit score for an FHA loan is 500, it is recommended to have at least a 580 credit score to qualify for a 3.5% down payment. However, some lenders may have different requirements.