Can I buy a house with a 500 credit score?
People hear that FHA has a 500 credit score floor and assume a 500 score is enough to buy a house. The guideline is real, but it is only one piece of the file. I arrange these owner-occupied loans in Maine and Florida, and I start with the published FHA down-payment split, then look at the rest of the credit report, income, reserves, and the property.
The details are on my Maine FHA and Florida FHA pages. This post answers the 500-score question directly.
FAQ
- Can I buy a house with a 500 credit score?
- Sometimes, through FHA, with 10% down, if the rest of the file supports it. FHA guidelines allow a score from 500 to 579 with 10% down, subject to lender overlays and underwriting. I arrange these owner-occupied loans in Maine and Florida only. A score alone does not approve a file. Not everyone will qualify.
- How much do I need to put down with a 500 credit score?
- FHA guidelines generally require 10% down when the decision credit score is 500 to 579. The 3.5% down option is for a score of 580 or higher. Lender overlays can be stricter than the guideline. Gift funds from family may be allowed on an eligible file.
- Does a 500 credit score guarantee an FHA approval?
- No. FHA guidelines and a 500 score do not guarantee approval, a rate, or a timeline. Underwriters still review payment history, DTI, reserves, recent late payments, collections, income, and the property. Some lenders will not accept the 500 to 579 tier at all.
- What else besides my credit score does an underwriter review?
- Payment history, recent late payments, collections or charge-offs, debt-to-income ratio, reserves, the source of the down payment, and whether the property meets FHA condition standards. Automated or manual underwriting findings also matter. I review the full file, not the score alone.
- Is this FHA 500-score option available outside Maine and Florida?
- Not through me. I originate owner-occupied FHA loans in Maine and Florida only. If the home you will live in is in another state, I cannot originate that residential file. See my Licensing page.
- If my score is 500, should I wait until I reach 580?
- It depends on the rest of the file and how soon you need to buy. A 580 score can open FHA's 3.5% down guideline and may fit more lender overlays. If waiting would materially change the down payment or the lender options, I will say so. There is no single right answer for every buyer.
Sources
All loans are subject to credit and underwriting approval. Not all applicants will qualify. Program terms and availability can change. This page is for general education and is not a loan offer or a commitment to make a loan.
What FHA guidelines actually say
FHA guidelines allow two down-payment tiers based on the decision credit score:
- A score from 500 to 579 generally needs 10% down.
- A score of 580 or higher can use 3.5% down.
That split already appears on my Maine and Florida FHA pages. It is an FHA program guideline, not an approval. Lenders can set overlays on top of FHA, and a file can still be approved or declined based on the full underwrite. I do not quote rates here because pricing depends on the file, the property, and the market.
FHA loans are for a home you will live in as your primary residence. They are not the path I use for a rental investment property. If you are buying a primary home in Maine, start with the Maine FHA page. If the home is in Florida, use the Florida FHA page. Gift funds from family may be allowed on an eligible FHA file; I confirm the source and the paper trail before you count on them.
A credit score alone does not approve a file
A 500, 560, or 620 score is one number on the report. Underwriting still reviews the rest of the file. The items that most often change the outcome are:
- Payment history, including housing payments if you have them
- Recent late payments
- Collections, charge-offs, and unpaid judgments
- Debt-to-income ratio (DTI)
- Reserves after closing
- Down payment source and any gift funds
- The property, including FHA condition standards
A thin file, a recent bankruptcy or foreclosure, or a pattern of late payments can weigh more than the score itself. I review those items with you before we talk about a contract.
Automated underwriting, manual underwriting, and lender overlays
Many FHA files run through automated underwriting (FHA's TOTAL Scorecard, usually through DU or LP). An automated approval is still subject to regular underwriting. A Refer from TOTAL, or a file with no credit score, goes to manual underwriting, which is a different review with its own documentation and compensating-factor rules. Manually underwritten files with a score below 580 face tighter debt-ratio limits.
Lender overlays matter just as much as the FHA handbook. Some lenders will not take a 500 to 579 score even though FHA allows that tier with 10% down. Others will, but only with a clean recent payment history and a complete file. I take the file to lenders that match the scenario instead of forcing it into one bank's overlay.
This is also where my no minimum credit score mortgage page fits, and the companion post Turned Down for Your Credit Score? What Changed. One wholesale lender I work with no longer sets its own minimum credit score on many conventional, FHA, VA, and USDA loans when the file gets an automated underwriting approval. That change does not erase FHA's program minimums, and it does not cover manually underwritten loans or select down payment assistance programs, which still carry score minimums with that lender. It does not turn a 500 score into a 3.5% down file. It does not apply to DSCR loans or HELOCs. And it is not a promise that automated underwriting will approve every file.
Where I can help, and where I cannot
I originate owner-occupied and second-home residential loans in Maine and Florida only. If the home you will live in is in another state, I can't originate that FHA loan. Licensing details are on my Licensing and Disclosures page.
If you are a first-time buyer, my Maine first-time home buyer and Florida first-time home buyer programs pages are useful next reads, along with how many FHA loans you can have and FHA cost. Down payment help, when it fits, is covered on FHA down payment assistance. Many assistance programs set their own score minimums, so a 500 to 579 score may not fit them. I do not treat a 500 score as a 3% down conventional file. Conventional loans with mortgage insurance still carry a score minimum with the lender I use.
FAQ
Can I buy a house with a 500 credit score?
Sometimes, through FHA, with 10% down, if the rest of the file supports it. FHA guidelines allow a score from 500 to 579 with 10% down, subject to lender overlays and underwriting. I arrange these owner-occupied loans in Maine and Florida only. A score alone does not approve a file. Not everyone will qualify.
How much do I need to put down with a 500 credit score?
FHA guidelines generally require 10% down when the decision credit score is 500 to 579. The 3.5% down option is for a score of 580 or higher. Lender overlays can be stricter than the guideline. Gift funds from family may be allowed on an eligible file.
Does a 500 credit score guarantee an FHA approval?
No. FHA guidelines and a 500 score do not guarantee approval, a rate, or a timeline. Underwriters still review payment history, DTI, reserves, recent late payments, collections, income, and the property. Some lenders will not accept the 500 to 579 tier at all.
What else besides my credit score does an underwriter review?
Payment history, recent late payments, collections or charge-offs, debt-to-income ratio, reserves, the source of the down payment, and whether the property meets FHA condition standards. Automated or manual underwriting findings also matter. I review the full file, not the score alone.
Is this FHA 500-score option available outside Maine and Florida?
Not through me. I originate owner-occupied FHA loans in Maine and Florida only. If the home you will live in is in another state, I cannot originate that residential file. See my Licensing page.
If my score is 500, should I wait until I reach 580?
It depends on the rest of the file and how soon you need to buy. A 580 score can open FHA's 3.5% down guideline and may fit more lender overlays. If waiting would materially change the down payment or the lender options, I will say so. There is no single right answer for every buyer.
What to send me for a first look
Send a recent credit snapshot if you have one, a sense of your income and monthly debts, how much you can put down, and the town or county you want to buy in. I will tell you whether an FHA 10% path, an FHA 3.5% path, or more credit work is the honest next step. Text me at (207) 615-7770, or email Travis@travis.mortgage. You can also use my contact page.
Not everyone will qualify. If waiting to raise the score to 580 would unlock the 3.5% down option and a smoother overlay path, I will say that plainly.
I'm Travis Penny, a Senior Mortgage Broker with Vision Mortgage, LLC. I help clients buy and refinance homes in Maine and Florida, and I arrange DSCR loans on investment and rental properties in 38 states. I started in 2004 and I'm still here.