FHA with a low credit score: what actually works below 620.
FHA's own rulebook reaches lower than most lenders will go. Here's where our lenders draw the lines, what a low-score FHA purchase or refinance takes, and the mortgage insurance math nobody explains.
- 3.5% down with 620+ credit.
- Below 620: purchases with 20% down, and refinances are considered.
- FHA's national floor is a 500 score; under it, FHA can't insure the loan.
- FHA Streamline: light paperwork and no appraisal when your current loan is FHA.
- Homes you live in, 1–4 units.
- No hard credit pull to see your options.
Rather just talk? Call or text us at (949) 401-7593
By Arran Amorozo, NMLS #1491497 · West Capital Lending, Inc. · Content last reviewed:
The short answer
FHA's national program reaches down to a 500 credit score, and lenders layer their own rules on top. Ours: 3.5% down from 620 up, and below 620, a purchase with 20% down. FHA refinances below 620 are still considered, and the FHA Streamline has no minimum score with us.
Two floors: FHA's and the lender's
FHA itself insures loans down to a 500 credit score; under 500, it won't insure them at all. The "FHA minimum" a lender quotes you is usually that lender's own overlay on top. Ours is simple: from 620 up, the down payment can be just 3.5%, and below 620 a purchase takes 20% down plus closing costs.
Putting 20% down helps in another way too: the annual premium lands on FHA's lower tier, and it stops after 11 years instead of running for the life of the loan.
Refinancing an FHA loan below 620
Below 620, an FHA refinance is still on the table, cash-out included, and each one is reviewed on its own file. Cash-out can reach 80% of the home's value, and FHA wants 12 months without a late payment on any account.
The Streamline shortcut
When your current mortgage is already an FHA loan, a Streamline refinance replaces it with very little paperwork and no appraisal, and we don't set a minimum score for it. It even works on a home you've moved out of and now rent. FHA's test is simple: the new loan has to leave you better off.
FHA in plain numbers
| Term | FHA |
|---|---|
| Down payment, 620+ credit | 3.5% |
| Down payment, below 620 | 20% |
| Refinances below 620 | Considered, cash-out included |
| Cash-out refinance | Up to 80% of value |
| Rate-and-term refinance | Up to 97.5% of value |
| FHA Streamline | For a current FHA loan: light paperwork, no appraisal, no minimum score from us |
| Payment history | 12 months with no late payments on any account |
| Property | A home you live in, 1–4 units; rent from the other units can help you qualify |
| Down payment help | Gift money can cover the entire down payment |
| Upfront mortgage insurance | 1.75% of the base loan, usually rolled into it |
| Annual mortgage insurance, loans over 15 years | Base loan of $726,200 or less: 0.50% at 95% loan-to-value or under, 0.55% above it. Larger base loans: 0.70% and 0.75%. |
| How long it lasts | 11 years with 10% or more down; the life of the loan with less |
| Where | In all 35 states + D.C. where Arran is licensed |
The mortgage insurance math on one home
A $400,000 home, two ways:
| 620+ credit, 3.5% down | Below 620, 20% down | |
|---|---|---|
| Down payment | $14,000 | $80,000 |
| Base loan | $386,000 | $320,000 |
| Upfront premium (usually financed) | $6,755 | $5,600 |
| Annual premium, first year | 0.55%: about $177 a month | 0.50%: about $133 a month |
| Annual premium lasts | The life of the loan | 11 years |
Government premiums, figured on the base loan. The annual premium follows your balance, so it shrinks a little each year.
The trade-off with conventional
FHA's mortgage insurance is what you pay for its flexibility on credit. Plenty of borrowers start with FHA and move to conventional later, once their score and equity allow. Our conventional guide covers that side, including the below-620 conventional paths.
Common questions
Does FHA work with a credit score in the 500s?
It can. FHA insures loans down to a 500 score, and with our lenders a score below 620 needs 20% down on a purchase. Below 500, FHA can't insure the loan at all.
Can I refinance my FHA loan if my credit has slipped?
Yes, it's still considered below 620, cash-out included, and judged on the whole file. If your loan is FHA today, the Streamline needs very little paperwork and no appraisal.
What's an FHA Streamline, exactly?
A refinance from one FHA loan into another with very little paperwork and no appraisal. FHA only asks that the new loan leave you better off, and it works even if you've moved out and rent the home.
What does FHA mortgage insurance cost?
Two pieces. Upfront: 1.75% of the base loan, usually rolled into the loan. Annual (paid monthly, on loans over 15 years): with a base loan of $726,200 or less, 0.50% at 95% loan-to-value or under and 0.55% above it; with a larger base loan, 0.70% and 0.75%.
Can I remove FHA mortgage insurance?
Put down 10% or more and it ends after 11 years. Put down less and it stays as long as the loan does; the usual way out is a later refinance to a conventional loan, after you've built enough equity.
Can FHA buy a rental property?
Not a straight rental. FHA is for homes you live in, which can include a 2–4 unit building where you take one unit; rent from the others can help you qualify.
How much cash can I take out with an FHA refinance?
Up to 80% of the home's value on a home you live in, with 12 months of on-time payments. Below 620, cash-out is still considered.
Does checking my options affect my credit score?
No. We look at your options with a soft credit check, which has no effect on your score. A hard check only happens later, with your OK, if you decide to apply.
See your real numbers in 60 seconds.
The quiz on our FHA page checks your scenario against our lending rules in about a minute. No hard credit pull, and your information is never sold.
Check my FHA options →Rather just talk? Call or text us at (949) 401-7593
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