What Credit Score You Need for an FHA Loan

FHA loans require a minimum credit score, but the exact number depends on your down payment and the lender

The Federal Housing Administration does not set a single credit score floor. Instead, individual lenders decide their own minimums within FHA guidelines. Most lenders will work with a score of 580 or higher if you are putting down 10 percent, and some will go lower — down to 500 — if you can put down 10 percent. If you want to put down only 3.5 percent, most lenders want to see 620 or above, though a few will consider scores in the 580 range.

The score that matters is your middle score — if three bureaus report your credit, the lender uses the middle number, not the highest or lowest. You can check your own scores free through annualcreditreport.com, which is the official site for the three bureaus (Equifax, Experian, and TransUnion).

Key Takeaways

• Most FHA lenders require a credit score of 580 to 620, but this varies by lender and by how much you are putting down.
• A larger down payment (10 percent instead of 3.5 percent) can sometimes open doors at lenders who would otherwise decline a lower score.
• The lender uses your middle credit score from the three bureaus, so check all three before you apply.
• Recent late payments, high debt-to-income ratio, and unpaid collections can disqualify you even if your score is high enough.

How down payment size affects the credit score you need

A larger down payment reduces the lender's risk, which is why they are often willing to accept a lower credit score. If you can put down 10 percent instead of 3.5 percent, you may find lenders willing to work with a score as low as 500. This matters most if your score is between 500 and 580 — a range where many lenders will not budge at 3.5 percent down, but some will at 10 percent.

The trade-off is real: a 10 percent down payment means you borrow more money and pay more in interest over the life of the loan. But if a lower score is keeping you out of homeownership, the math might work in your favor. Run the numbers with a mortgage calculator to see whether the extra monthly payment is worth it to you.

What else lenders look at beyond your credit score

Your credit score is one piece of the picture. Lenders also examine your debt-to-income ratio — the percentage of your gross monthly income that goes to debt payments. Most FHA lenders want this ratio to be 43 percent or lower, though some will go to 50 percent if your score and down payment are strong. If you carry high credit card balances or have recent car loans, this ratio can work against you even if your score is acceptable.

Recent late payments are another sticking point. A 30-day late payment from six months ago will hurt more than one from three years ago. Lenders also look at collections accounts, charge-offs, and foreclosures. An FHA loan does not require you to have paid off old collections, but lenders want to see that you have been paying your current bills on time for at least the last two years.

Bankruptcy does not automatically disqualify you. FHA guidelines allow you to apply two years after a Chapter 7 discharge or one year after a Chapter 13 if you have been making payments on time since then. Your lender may have stricter rules, so ask directly.

How to improve your credit score before applying

If your score is close to a lender's minimum but not quite there, a few months of on-time payments can move the needle. Payment history makes up 35 percent of your credit score, so this is the fastest lever to pull. Do not open new credit accounts or make large purchases on credit in the months before you apply — both can lower your score temporarily.

Paying down credit card balances also helps, because it lowers your credit utilization ratio (the percentage of your available credit that you are using). Aim to get each card below 30 percent of its limit if you can. This takes longer than on-time payments to show up in your score, but it signals to lenders that you are managing your debt responsibly.

Do not close old credit cards after you pay them down. The length of your credit history matters, and closing accounts can actually hurt your score. Leave them open and unused.

Shopping for lenders with different credit score requirements

Not all lenders have the same minimums. A score of 600 might be rejected at one lender and approved at another. This is why it pays to get quotes from multiple lenders — at least three — before you commit. Each lender will pull your credit once, and multiple pulls within a two-week window count as a single inquiry, so your score will not take a hit.

Credit unions sometimes have more flexible requirements than banks, especially if you have been a member for a while. Mortgage brokers can also shop your application across multiple lenders at once, which saves you time. Ask any lender upfront what their minimum credit score is and whether they have flexibility based on down payment or other factors.

Understanding the FHA credit score versus your actual credit report

Your credit score is a number; your credit report is the record behind it. A lender will pull both. The score tells them the risk level; the report tells them why. If your score is 610 but your report shows you have been paying everything on time for two years, a lender may be more willing to work with you than if your score is 610 because you just paid off a collection account last month.

You can get your free credit report once per year from annualcreditreport.com. Check it for errors — mistakes on your report can lower your score unfairly. If you find an error, dispute it with the bureau directly through their website. Corrections can take 30 to 45 days.

What happens if your credit score is below the lender's minimum

If your score is below what lenders will accept, you have a few paths forward. The first is to wait and build your score over time — three to six months of on-time payments can make a real difference. The second is to increase your down payment if you can, which opens doors at some lenders. The third is to add a co-borrower with a stronger credit profile, though both of you will be responsible for the full loan.

Some lenders offer manual underwriting, which means a person reviews your application instead of an automated system. This is more common at credit unions and smaller lenders. Manual underwriting can sometimes override a low score if your overall financial picture is solid — for example, if you have a stable job, low debt, and a large down payment. It is worth asking about, but do not count on it.

Frequently Asked Questions

Can I get an FHA loan with a credit score of 550?

Most lenders will not approve a score that low, but a few may consider it if you put down 10 percent or more and have strong income and low debt. Call lenders directly to ask — do not assume you are automatically disqualified. Manual underwriting at a credit union or broker may be your best option.

Does my spouse's credit score matter if we are both on the loan?

Yes. If you are both borrowers, the lender will use both scores. They typically use the lower of the two middle scores to decide whether to approve the loan. If one of you has a much stronger score, you might apply with only that person as the borrower, though this affects how much you can borrow.

How long does a late payment hurt my credit score?

A late payment stays on your report for seven years, but its impact fades over time. A late payment from two years ago hurts less than one from two months ago. Lenders care most about recent payment history, so focus on making every payment on time from now forward.

Will paying off collections improve my credit score enough to get approved?

Paying off a collection can help your score, but it does not erase the account from your report. Lenders will still see it. The good news is that a paid collection is less damaging than an unpaid one. If you have the money, paying it off before you apply is worth doing.

Can I use a credit builder loan to raise my score before applying for an FHA loan?

Yes, but it takes time. A credit builder loan reports to all three bureaus and can raise your score by 30 to 100 points over several months. If you have time before you want to buy, this is a solid strategy. If you are trying to buy soon, focus on paying down existing debt and making on-time payments instead.