Credit score for an FHA loan: the 580 and 500 rules, explained

You saw “FHA loans from 580” on an ad, opened your credit app, saw 604, and figured you were in. Then a loan officer told you your qualifying score is 571. Neither number was wrong. Your app showed one scoring model, the lender pulled the older mortgage versions from all three bureaus, and FHA’s rule for choosing among those scores did the rest.

FHA’s credit score requirement is short on paper. What makes it confusing is everything around it: which score FHA uses, how it handles two borrowers, what happens below 580, and the lender’s own rules stacked on top. Each piece below is quoted or paraphrased from HUD’s own wording.

The two numbers FHA actually uses

HUD calls the score that matters the Minimum Decision Credit Score, or MDCS. HUD’s Mortgagee Letter 2026-11, which restates the rules in Handbook 4000.1, sets the cutoffs like this:

The jump at 580 is about cash, not approval odds. Say you’re buying a $250,000 home. At a 580 MDCS the minimum down payment is $250,000 x 3.5% = $8,750. At 579 it’s $250,000 x 10% = $25,000. One point on one score costs $16,250 in upfront cash in that example.

How FHA decides which score is yours

Your app probably shows a VantageScore or FICO 8. Mortgage lenders pull a three-bureau report with the classic mortgage FICO versions, and those often run lower. (Our guide to the credit scores mortgage lenders actually pull covers why.)

From those three scores, FHA builds the MDCS in two steps:

1. For each borrower, take the middle score if three different scores come back, the lower one if only two come back, and the single score if there’s only one.
2. Compare the borrowers. The MDCS is the lowest of those borrower scores.

Worked example. Say two people apply together.

The MDCS is 598, Dana’s middle score. Luis’s stronger file doesn’t lift it. Now say Dana’s Equifax score had been 578 instead of 598. Her middle score becomes 578, the MDCS falls into the 500 to 579 band, and the loan is capped at 90% financing even though Luis is well above 580. The full logic, with more cases, is in the middle score rule, explained, and you can run your own numbers in the middle score calculator.

What changes on January 1, 2027

Mortgagee Letter 2026-11 adds FICO 10T and VantageScore 4.0 alongside Classic FICO for FHA case numbers assigned on or after January 1, 2027. HUD says the score thresholds above “remain unchanged regardless of Credit Score Model Type,” and a three-bureau report is still required.

The math gets one more layer. If a lender submits more than one model, it picks your middle (or lower, or only) score within each model first. Your borrower-level score is then the lowest of those picks. The lender has to use the same model types for every borrower on the loan, so it can’t send FICO 10T for you and VantageScore 4.0 for your co-borrower. A lender that submits both Classic FICO and VantageScore 4.0 will use whichever of your two picks comes out lower. ABA Banking Journal’s summary of the letter adds that each model submitted has to get its own Accept from FHA’s automated scorecard for the loan to be accepted overall.

Why your lender may say 620 when FHA says 580

FHA insures the loan, but a private lender makes it. The lender that underwrites and funds your loan answers to the investors who buy it and carries its own risk if loans go bad, so many lenders set a minimum above HUD’s. That extra rule is called a mortgage overlay.

Overlays explain most of the “FHA says 580 but nobody will do 580” frustration. They also mean one lender’s no tells you little about what FHA itself allows. Two practical questions get you a straight answer:

• “What’s your minimum score for an FHA purchase, and is that FHA’s rule or yours?”
• “Do you manually underwrite FHA loans below 580 or with no score?”

A lender with a 640 overlay and a lender that goes to 580 are selling the same government program with the same FHA rules underneath.

Below 580, or no score: the manual underwriting limits

Most FHA files are run through FHA’s automated scorecard first. Files it doesn’t approve, and every file with no credit score, go to manual underwriting, where a human underwriter checks the loan against fixed debt-to-income limits. Mortgagee Letter 2026-11 sets those limits by MDCS, and a score under 580 gets the tightest ones:

In dollars, using an example income of $5,000 a month: At 31/43, your total housing payment can be up to $1,550 and all monthly debts together up to $2,150. At 40/50 with two compensating factors, those limits rise to $2,000 and $2,500. That $450 difference in allowed housing payment can decide whether a given house is within reach.

If you have no credit score, HUD says you’re “eligible for maximum financing” but must be manually underwritten. The lender builds your payment history from records outside the credit report instead. HUD also says ratios for borrowers with no score are figured using income only from borrowers who will live in the home, so a non-occupant co-borrower’s income can’t help there.

Collections and disputes can matter as much as the score

A score of 600 doesn’t guarantee the file clears. FHA has separate rules for collection accounts, charge-offs and disputed accounts in Handbook 4000.1, and they can change your debt-to-income ratio or require extra documentation even when your score is fine. HUD revises those details through handbook updates, so ask the loan officer how each of your collections will be treated before you pay or settle anything.

Two common mistakes show up here. First, paying an old collection doesn’t remove it, and the classic FICO versions mortgage lenders use don’t ignore paid collections the way FICO 9 and VantageScore 4.0 do. Read should you pay a collection account before you send money. Second, opening disputes on accurate accounts right before you apply can slow underwriting. Dispute genuine errors early, and see what not to dispute before a mortgage.

Your next moves if FHA is the plan

1. Get your three-bureau mortgage scores from a lender’s preapproval pull, or at least pull all three reports free at AnnualCreditReport.com and check them for errors.
2. Find your middle score, and your co-borrower’s. The lower of the two middles is the number to plan around.
3. If you’re between 560 and 600, figure the down payment both ways. The 3.5% versus 10% gap is often the biggest number in the whole decision.
4. Ask at least two lenders for their FHA minimum and whether they manually underwrite. Overlays vary.
5. Leave collections alone until a loan officer tells you how they’ll be counted.
6. If your loan won’t get a case number until 2027, ask whether the lender plans to submit more than one score model, since the lowest of them will count.