Most lenders will work with you at 580 or above, but your score determines what you pay

There is no single credit score that unlocks a mortgage. Instead, lenders set minimum thresholds, and your score within that range determines your interest rate and whether you need a larger down payment. A score of 580 or higher opens doors to Federal Housing Administration (FHA) loans, which are the most forgiving option. Conventional loans — the kind backed by Fannie Mae or Freddie Mac — typically start at 620. Some lenders will go lower, and some require higher scores depending on the loan type and your other finances.

The relationship between score and cost matters more than hitting a magic number. A borrower with a 640 score and a borrower with a 760 score might both get approved for the same house, but the person with 760 will pay a lower interest rate — sometimes 0.5 to 1 percentage point lower. Over a 30-year mortgage, that difference adds up to tens of thousands of dollars.

Key Takeaways

  • FHA loans accept scores as low as 580; conventional loans typically start at 620, though some lenders go lower.
  • Your score determines your interest rate and down payment requirement, not just whether you get approved.
  • A score below 620 narrows your options but does not close them — FHA loans, portfolio lenders, and credit unions may still work with you.
  • Lenders look at your full financial picture, not your score alone, so a lower score with strong income and savings can still lead to approval.
  • The difference between a 620 score and a 740 score can cost you 1 to 2 percentage points in interest rate over the life of the loan.

How FHA loans work with lower credit scores

FHA loans are insured by the Federal Housing Administration and are designed to help people with less-than-perfect credit histories. The minimum credit score is 580 for a loan with a 3.5 percent down payment. If your score falls between 500 and 579, some FHA lenders will still work with you, but you will need to put down 10 percent instead of 3.5 percent.

FHA loans come with mortgage insurance premiums (MIP) built into your monthly payment. This protects the lender if you default, and it costs more when your score is lower. The upfront MIP is typically 1.75 percent of the loan amount, added to what you borrow. Annual MIP varies but usually ranges from 0.55 to 0.80 percent of the loan balance per year, depending on your down payment and loan term.

FHA loans do not require perfect finances otherwise. Lenders look at your debt-to-income ratio — how much you owe each month compared to your gross income — and typically want to see that ratio at 43 percent or lower. If you have steady income and can show you have handled past credit problems, an FHA loan can work even with a score in the 580 to 620 range.

Conventional loans and score requirements by lender

Conventional loans backed by Fannie Mae or Freddie Mac have a standard minimum of 620, but this is not universal. Some lenders, particularly credit unions and smaller banks, will go down to 600 or even lower if your income and savings are strong. Larger banks and mortgage companies tend to stick closer to 620 or higher.

Within the conventional market, your score determines your rate tier. A score of 620 to 639 typically carries a higher rate than 640 to 659, which carries a higher rate than 680 to 699, and so on. The jumps are not always the same — some lenders have more tiers than others — but the pattern is consistent. Shopping around matters because different lenders price risk differently. One lender might charge 0.75 points higher for a 620 score; another might charge 1.25 points.

Conventional loans also require mortgage insurance (PMI) if you put down less than 20 percent, but PMI is usually lower than FHA mortgage insurance, especially if your score is above 660. PMI can be removed once you reach 20 percent equity in the home, whereas FHA mortgage insurance stays for the life of the loan if you put down less than 10 percent.

What happens if your score is below 580

Below 580, FHA loans are off the table for most borrowers. Your options narrow but do not disappear. Portfolio lenders — banks that hold mortgages in-house rather than selling them — sometimes work with scores in the 500 to 580 range. Credit unions often have more flexibility than conventional lenders and may offer mortgages to members with lower scores, especially if you have been a member for several years and have a good history with them.

Subprime mortgages, which target borrowers with poor credit, exist but come with significantly higher interest rates and fees. These loans are riskier for lenders and more expensive for you. Before pursuing a subprime loan, exhaust other options: credit unions, portfolio lenders, and waiting a few months to rebuild your score if possible.

If your score is very low — below 500 — lenders will want to see evidence that the credit problems are behind you. This might mean a letter explaining past hardship, proof of on-time payments for the last 12 to 24 months, or a co-signer with better credit. Some lenders will also require a larger down payment or a shorter loan term to offset the risk.

How lenders use your score alongside other factors

Your credit score is one piece of your mortgage application. Lenders also examine your debt-to-income ratio, employment history, down payment amount, and savings. A borrower with a 600 score but stable income, low debt, and 15 percent down may be approved faster than a borrower with a 680 score, high debt, and no savings.

Employment history matters. Lenders want to see at least two years in your current field, though they may accept a job change if you stayed in the same industry. A recent job loss or frequent job changes can raise red flags even with a good score. Conversely, a long employment history and stable income can offset a lower score.

Your down payment size affects approval odds. The larger your down payment, the less risk the lender takes, and the more willing they are to work with a lower score. A 15 percent down payment with a 600 score is more attractive to lenders than a 3 percent down payment with a 660 score.

The cost difference between score ranges over time

Interest rates tied to credit scores compound over decades. A borrower with a 620 score on a $300,000 mortgage at 7.0 percent interest will pay roughly $1,996 per month. The same borrower with a 740 score might get 5.8 percent, paying about $1,776 per month. That $220 monthly difference equals $79,200 over 30 years, before accounting for taxes and insurance.

This is why rebuilding your score before buying, if you have time, often makes financial sense. Even a 40-point increase — from 620 to 660 — can lower your rate by 0.25 to 0.5 percentage points. If you are not in a rush to buy, paying down existing debt and making on-time payments for six to twelve months can move your score meaningfully and save you thousands over the life of the loan.

Frequently Asked Questions

Can I get a mortgage with a 550 credit score?

FHA loans are not available at 550, but portfolio lenders and some credit unions may work with you. Expect higher interest rates and a larger down payment requirement. You may also need a co-signer or proof of recent financial stability. Call local credit unions and ask about their minimum score; many are more flexible than banks.

Does my spouse's credit score matter if we apply together?

Yes. Lenders typically use the lower score of the two applicants when you apply jointly. If one spouse has a significantly lower score, you might get a better rate by having only the higher-score spouse apply, though this affects how much you can borrow based on one income. Discuss both scenarios with a lender.

How long does it take to improve my score enough to buy?

Score changes depend on what is dragging it down. Paying off a collection account or removing an error can jump your score 50 to 100 points quickly. Building a positive payment history takes longer — usually six to twelve months of on-time payments before you see meaningful movement. Check your credit report for errors first; disputing them is free and sometimes fast.

Will getting pre-approved hurt my credit score?

A mortgage pre-approval involves a hard inquiry, which lowers your score by a few points temporarily. Multiple inquiries within 14 to 45 days (depending on the scoring model) count as one inquiry, so shopping around with several lenders in a short window does not multiply the damage. The impact fades within months.

What if my score is 619 — just below the conventional minimum?

One point below 620 changes nothing about your options. FHA loans at 580 or above are still available and often cheaper than conventional loans for scores in the 600 to 640 range because FHA mortgage insurance is sometimes lower than conventional PMI. Compare FHA and conventional offers side by side; the lower-score FHA option may have a better total cost.