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Can You Get an FHA Loan with a 500 Credit Score? Here’s What to Know

Yes, it’s possible to get a mortgage with a 500 credit score—especially through an FHA loan.

Backed by the Federal Housing Administration, FHA loans are one of the most flexible mortgage options for buyers with low credit scores, limited savings, or past credit issues. If your score is in the 500–579 range, you still have a path to homeownership—but understanding how the rules work is key to getting approved.

How FHA Loans Help Buyers with Low Credit Scores

FHA loans are designed for first-time buyers or individuals who may not qualify for conventional mortgages. While most traditional lenders require scores above 620, FHA guidelines allow:

  • Credit scores between 500 and 579 with a 10% down payment
  • Scores of 580 or higher with just 3.5% down

This makes FHA loans a strong option for anyone with a history of credit challenges, bankruptcies, or limited credit history.

Getting Approved with a 500–579 Credit Score

While it’s harder to qualify with a 500 score, it’s not out of reach. You’ll likely need:

  • A stable income and job history
  • Proof you’ve managed recent bills responsibly
  • Willingness to make a 10% down payment
  • A lower debt-to-income ratio to offset credit concerns

Lenders may also do manual underwriting, reviewing your full financial picture rather than relying solely on your credit report. This can help when your score is low but your current finances are stable.

What If You’re Around 520 or 585?

If you’re near 520, expect stricter lending terms—but some lenders may still work with you if you meet other qualifications. At 585, you’re just above the 580 threshold, which could mean a smaller down payment and better approval odds. In both cases, shopping around is critical, as lender policies vary.

Tips to Strengthen Your FHA Loan Application

If you’re close to the minimum credit requirement, small improvements can boost your approval chances. Here’s what to focus on:

  • Pay down credit card balances and avoid new debt
  • Make all payments on time for at least 6 months
  • Check your credit report for errors and dispute them
  • Avoid applying for other loans or credit lines before applying

Even small score increases can lead to lower down payments or better interest rates.

Are There Loans with No Down Payment?

FHA loans always require a down payment, but if you’re looking for home loans with no down payment, consider:

  • USDA Loans – Available in rural areas with income limits
  • VA Loans – For veterans and eligible military members

These loans may offer 0% down financing if you qualify, but they often have more specific eligibility requirements than FHA.

Conclusion

Securing an FHA loan with a 500 credit score isn’t easy—but it is possible. By understanding the credit and down payment rules, improving your financial profile, and exploring all available programs, you can move closer to owning a home even with less-than-perfect credit. Whether you’re at 520 or 585, FHA loans can provide a valuable bridge toward long-term stability and ownership.

Sources

Federal Housing Administration – https://www.hud.gov

Consumer Financial Protection Bureau – https://www.consumerfinance.gov

USDA Loan Program – https://www.rd.usda.gov/programs-services/single-family-housing-guaranteed-loan-program

VA Home Loans – https://www.va.gov/housing-assistance/home-loans/

MyFICO – https://www.myfico.com