Can You Get an FHA Loan With a 500 Credit Score? What the Guidelines Say — and What Actually Gets It Done – Tim Hart

Yes. FHA guidelines allow a credit score as low as 500: 10% down for scores from 500 to 579, and 3.5% down at 580 and above, subject to lender requirements. What stops most buyers isn’t FHA — it’s that many lenders set their own higher minimums and never work the file. A low score makes the file harder, not automatic. Below is a real file that started at 477 and still closed, and what actually decides whether a score in the 500s gets to the closing table.

A real file: started at 477, still closed

The homeowners in the video above came to us with a 477 credit score. Most lenders would have stopped the conversation right there. Instead, the first job was the credit itself: we worked the score up to 505, then closed their loan — and the result was $3,505 a month in cash-flow savings.

They already owned their home, so theirs wasn’t a purchase story. I tell it here because the path is the same one a buyer in the 500s walks: the score you have today is the starting point, not the verdict. What matters is whether someone will actually look at the whole file, fix what’s fixable, and structure the loan around the guidelines as they’re written. Every file is different and I can’t promise the same result — but a 477 that closed is exactly why a score in the low 500s deserves a real look instead of a fast no.

What FHA actually allows

FHA’s own guidelines go lower than most people think:

500 to 579: you can qualify with 10% down.

580 and above: you can qualify with 3.5% down.

Those are FHA guidelines, and every loan is still subject to lender requirements and full approval — the score alone never approves anybody. But the floor is 500, not the 620 or 640 most buyers get quoted.

Below 500, FHA doesn’t go. That’s not the end of the road either — it means the first phase is credit work, like the file above: get the score to the line, then apply. The honest answer for a 477 today is “not yet, and here’s the plan,” not “no.”

Why most lenders still say no

If FHA allows 500, why does everybody quote 620? Because lenders are allowed to add their own stricter rules on top of FHA’s — called overlays — and most do. A 620 or 640 minimum is the lender’s policy, not FHA’s. It’s easier for them: low-score files take more work, more documentation, and a closer read.

So a lot of buyers with scores in the 500s were never actually turned down by FHA. They were turned down by one lender’s overlay, and nobody told them there’s a difference. That’s exactly the kind of file worth a second look — bring the denial, and I’ll tell you whether it was the guidelines or just that lender.

What makes a low-score file work

At this end of the range, the whole file gets read, not just the score. What carries weight:

What’s actually in the report. Old collections, maxed-out cards, and recent late payments all tell different stories. Some of it can be improved faster than you’d think — paying down revolving balances and dealing with collections the right way is often the first move (I walk through the collections question in the video linked below).
The rest of the picture. Steady employment and income, a debt-to-income ratio with room in it, and some money left over after closing all work in your favor. A strong file everywhere else gives a low score context.
A recent pattern that points the right way. Underwriters look at direction, not just history. Twelve months of on-time payments after a rough patch reads very differently from the same rough patch still going.

None of that guarantees an approval — it means the file gets judged on everything, the way it’s supposed to be.

If your score is in the 500s, do this first

Don’t rule yourself out, and don’t take the first no as the final answer. Get your actual report reviewed line by line so you know what’s costing you points and what’s fixable. Make the quick moves first. And be straight about your timeline: if the right answer is three months of credit work before applying, better to hear that now than to collect a denial that didn’t have to happen.

If the file can work, I’ll lay out the plan. If it can’t yet, I’ll show you what has to change to get it there.

FAQs

Can I buy a home with exactly a 500 credit score?

FHA guidelines allow it, with 10% down, subject to lender requirements and full approval. The score gets the file opened; the rest of your file — income, debts, what’s in the report — decides the rest. Not every lender works at that floor, which is why the lender matters as much as the score.

What if my score is under 500?

FHA doesn’t go below 500, so the first job is the credit itself — exactly like the file in the video, which started at 477 and closed after the score came up to 505. The right first step is a plan for the score, not an application.

How much do I need down with a score in the 500s?

At 580 and above, 3.5% down. From 500 to 579, 10% down. Those are FHA guidelines, subject to lender requirements.

Does every lender offer FHA loans down to 500?

No. Many lenders set their own minimums at 620 or 640 even though FHA allows lower. If you were told no at a score in the 500s, it’s worth asking whether that was FHA’s rule or that lender’s.

How long does it take to raise a score enough to qualify?

It depends entirely on what’s in the report. Some moves, like paying down credit card balances, can show up within a billing cycle or two; older, heavier items take longer. Anyone who guarantees you a number or a date is guessing. A line-by-line review gives you a real timeline instead of a sales pitch.

Can I use an FHA loan in the 500s for a manufactured home?

Often, yes. The home and the land both have to meet the program’s requirements, and the score rules work the same way. It’s a conversation to have before you buy either one — my manufactured home post linked below walks through it.

Can You Get an FHA Loan With a 500 Credit Score? What the Guidelines Say — and What Actually Gets It Done