Can I Get a Mortgage with a 580 Credit Score? Yes, Here's How

FHA Loan with 580 Credit Score: The Official Requirements

Let's start with what [HUD actually says](https://www.hud.gov/program_offices/housing/fhahistory), not what random lenders claim. The Federal Housing Administration allows borrowers with a 580 FICO score to put down just 3.5%. That's the floor. It's been the floor. And despite what some loan officers might tell you, it's not changing anytime soon. Here's the breakdown that should be at the top of every article on this topic (but usually isn't):

• 580+ credit score: 3.5% minimum down payment required
• 500-579 credit score: 10% minimum down payment required
• Below 500: Not eligible for FHA financing
• Current FHA 30-year fixed rate: 5.75% - 5.91% as of February 2026

Lender Overlays: Why Your 580 Score Gets Rejected Anyway

Here's what other articles won't tell you: just because FHA allows 580 doesn't mean every lender will approve you at 580. Most major lenders add their own requirements—called lender overlays—on top of FHA guidelines. Chase, Wells Fargo, and Bank of America? They typically want 620 or higher, regardless of what FHA permits. This is where borrowers get blindsided. They read that 580 is the minimum, apply at their local bank, and get denied. Then they assume they can't buy a house. Wrong. You just applied at the wrong lender. Lenders known for honoring the true 580 FHA floor include Carrington Mortgage, New American Funding, and Freedom Mortgage. These aren't subprime shops—they're legitimate lenders who've built their business model around serving borrowers that big banks ignore. Credit unions are another option, particularly those that keep loans in-house rather than selling to Fannie Mae or Freddie Mac. Before you apply anywhere, ask this question directly: "What is your minimum credit score for FHA loans?" If they say anything above 580, thank them and move on. If you're also [carrying student loan debt](/blog/how-to-get-a-mortgage-with-student-loan-debt), make sure to ask how they calculate that payment for your debt-to-income ratio—another area where overlays vary wildly.

Manual Underwriting: Your Backup Plan at 580

Most mortgage applications run through an Automated Underwriting System (AUS). Punch in your numbers, get an approval or denial in minutes. But here's the thing: AUS systems get nervous around 580 scores. Even if you technically qualify, the computer might kick your file out. That's where manual underwriting comes in. A human underwriter reviews your file instead of an algorithm. And they can approve loans that the computer won't—if you bring compensating factors to the table. Compensating factors are basically proof that you're less risky than your credit score suggests. The [Consumer Financial Protection Bureau](https://www.consumerfinance.gov/owning-a-home/) outlines what lenders look for, and here's the practical version: you need at least two of these to get a manual approval.

• 3+ months of cash reserves after closing (mortgage payments saved in the bank)
• Debt-to-income ratio under 43% (lower is better—under 36% is ideal)
• 12+ months of on-time rent payments (documented with canceled checks or bank statements)
• Minimal payment shock (new mortgage payment isn't dramatically higher than current rent)
• Stable employment for 2+ years in the same field

Why Your Score Is 580 (And Why It Matters for Approval)

Not all 580 scores are created equal. A borrower with a 580 due to high credit utilization is a completely different risk profile than someone with a 580 from a foreclosure two years ago. Lenders—especially manual underwriters—will look at the composition of your score. High utilization (using more than 30% of available credit) is the easiest fix and the least concerning to underwriters. It shows you have credit, you use it, you just use too much of it. Pay down a few cards before applying, and that 580 could jump to 620 in 30 days. If [your credit score is dragging down your rate](/blog/credit-score), utilization is the fastest lever to pull. Late payments are trickier. One 30-day late from three years ago? Not a dealbreaker. Multiple recent lates? That's a pattern, and underwriters hate patterns. You'll need to explain each one in a letter of explanation and show that whatever caused them (job loss, medical emergency) is resolved. Collections and charge-offs are the wild cards. Medical collections under $2,000 are often ignored by FHA guidelines. But a charged-off credit card or auto loan repo? That needs seasoning—typically 12-24 months since the last negative activity. If you're [looking at options below 580](/blog/bad-credit-home-loan), the requirements get even stricter.

Down Payment at 580: The 3.5% Reality Check

On a $250,000 home, 3.5% down is $8,750. Add closing costs (typically 2-5% of the loan amount), and you're looking at $13,750 to $21,250 needed to close. That's real money, and most 580-score borrowers don't have it sitting in savings. Good news: gift funds are fully allowed on FHA loans. Your parents, grandparents, employer, or even a close friend can gift you the entire down payment. You just need a gift letter stating the money doesn't need to be repaid. No three-month seasoning requirement like conventional loans demand. Even better news: Down Payment Assistance (DPA) programs exist in every state, and many specifically target borrowers in the 580-620 range. These aren't charity—they're structured programs, often offering 3-4% of the purchase price as a forgivable grant or low-interest second mortgage. Check your state housing finance agency first. Programs like Florida's Hometown Heroes, Texas' My First Texas Home, and California's MyHome Assistance Program all work with 580 scores. Some county and city programs go even lower. The catch? These programs have income limits, usually 80-120% of area median income. If you're [earning around $50,000 a year](/blog/can-i-buy-a-house-making-50000-a-year-in-2026), you likely qualify for multiple programs.

The True Cost: MIP, Rates, and Monthly Payments

FHA loans come with mortgage insurance premium (MIP), and you can't escape it. There's an upfront MIP of 1.75% of the loan amount (usually rolled into the loan) plus an annual MIP of 0.55% paid monthly. On a $250,000 loan, that's annual MIP of $1,375, or about $115/month on top of your principal and interest. With current FHA rates at 5.91%, here's what a $250,000 loan actually costs: Principal and interest: $1,486/month. MIP: $115/month. Property taxes (varies, but figure $250/month average). Homeowners insurance: $150/month. Total payment: approximately $2,000/month before HOA or other fees. Compare that to the [full breakdown of a $300,000 mortgage payment](/blog/what-does-a-300000-mortgage-actually-cost-per-month), and you'll see the pattern. MIP adds roughly 6% to your monthly payment compared to a conventional loan without PMI. That's the 580-score tax. But here's the thing: you're building equity instead of paying rent. And rent isn't getting cheaper. The [current rate environment](/blog/mortgage-rates-forecast) actually favors action. Waiting six months for a better score doesn't help if rates climb 0.5% in that time—you'll lose more in interest than you save by avoiding MIP.

The 12-Month Refi-Ready Strategy

Here's the play that separates smart borrowers from everyone else: buy now at 580, refinance in 12 months at 680+. It's not complicated, but it requires discipline. Month 1-3: Close on your FHA loan. Set up autopay. Never miss a payment—this is non-negotiable. Simultaneously, attack your credit utilization. Get every card below 30%, ideally below 10%. Don't close old accounts; the age of credit history matters. Month 4-6: Dispute any errors on your credit report. About 25% of reports have mistakes that could be dragging your score. Request your free reports from all three bureaus and look for accounts that aren't yours, incorrect balances, or late payments that you actually paid on time. Month 7-9: Become an authorized user on a family member's oldest, lowest-utilization card. This is a legal credit boost—their positive history gets added to your file. Don't use the card; just hold it. Month 10-12: Pull your score. If you've followed this plan and your starting issues were utilization-based, you should be at or above 680. At that point, you can [refinance into a conventional loan](/blog/refinancing) with no MIP requirement and potentially a lower rate. You'll need at least 20% equity to drop PMI entirely (unlikely after 12 months unless you bought below market), but even conventional PMI is cheaper than FHA MIP and eventually falls off. This strategy works best when you [compare FHA versus conventional loans](/blog/fha-vs-conventional) before buying, so you know exactly what score and equity targets you need.