FHA will insure a loan at a 500 score, while most lenders start Conventional at 620. On some programs the score only decides whether you're eligible. On others it also moves your down payment, your mortgage insurance or your rate. Buyers in the 500s and 600s have more options than most of them assume.
Minimum scores by program
| Program | Minimum the agency sets | What the score changes |
|---|---|---|
| FHA | 500; 580 for 3.5% down | Down payment (10% below 580, 3.5% at 580 and up) |
| VA | None; the lender sets it | Approval only. No mortgage insurance, and the funding fee doesn't change with score |
| Conventional | None in Fannie Mae's automated system; 620 on manual underwriting | Price adjustments and private mortgage insurance at every tier |
| USDA | None; the automated system and the lender decide | Approval path and documentation |
| DSCR (investor) | Set by each lender | Rate and maximum loan-to-value |
AAA Capital Funding does FHA from 500, VA from 500 and Conventional from 620.
FHA: the 500 and 580 lines
FHA has two thresholds, and both are about how much you can borrow. HUD calls the score that counts the Minimum Decision Credit Score.
- 580 and up: maximum financing, which is 96.5% loan-to-value (LTV) on a purchase. That's 3.5% down.
- 500 to 579: up to 90% LTV, so 10% down.
- Below 500: not eligible for FHA insurance.
On a $350,000 home in Broward County at 5.75% on a 30-year fixed, with taxes at 0.95% a year and insurance at $283 a month, the two tiers compare like this:
| 580 and up | 500 to 579 | |
|---|---|---|
| Down payment | $12,250 (3.5%) | $35,000 (10%) |
| Base loan | $337,750 | $315,000 |
| Loan with 1.75% upfront premium financed | $343,660.63 | $320,512.50 |
| Principal and interest | $2,005.51 | $1,870.42 |
| Monthly mortgage insurance | $154.80 (0.55% a year) | $131.25 (0.50% a year) |
| Full payment with taxes and insurance | $2,720.39 | $2,561.75 |
The mortgage insurance rate in that table changes because of the down payment, and the score has nothing to do with it. FHA prices its premiums on the loan amount, the term and the LTV. A 520 borrower and a 760 borrower who put the same amount down pay the same FHA mortgage insurance. That makes FHA a strong program for scores in the 500s and low 600s.
The 10% at 500 to 579 can come from a gift. FHA accepts gifts from family, an employer, a close friend with a documented relationship and a few other donors. At 580 and up, FHA 100% financing pairs the 96.5% first mortgage with a down payment assistance second that covers the 3.5%. Assistance programs set their own score floors, so ask which one matches your score. The FHA requirements guide covers the rest of FHA's rules.
How FHA picks the score
For each borrower, the lender pulls all three bureaus and takes the middle score, or the lower score when only two come back. The Minimum Decision Credit Score is the lowest of those among all the borrowers. HUD has also approved FICO 10T and VantageScore 4.0 alongside Classic FICO, and the 500 and 580 thresholds stay the same whichever model the lender uses.
FHA runs most loans through its TOTAL Mortgage Scorecard inside an automated underwriting system (AUS), the software that issues the approval. An automated approval is how FHA reaches debt-to-income ratios (DTI) as high as 46.9% for housing and 56.9% total, the figures QualRate models. A borrower with no credit score at all can still get FHA financing through manual underwriting using nontraditional credit like rent and utility history, with ratios capped at 31% and 43%.
Conventional: 620 and the pricing ladder
Fannie Mae's automated system, Desktop Underwriter (DU), no longer applies a hard minimum score. On a manually underwritten loan, Fannie Mae requires 620 for a fixed rate and 640 for an adjustable rate. Most lenders still start Conventional at 620, and AAA Capital Funding starts there too.
Above 620, the score works as a price ladder. Fannie Mae charges loan-level price adjustments (LLPAs), which are fees set by score and LTV. Lenders usually build them into the rate instead of charging cash. This is Fannie Mae's grid for a purchase with 3% down (LTV above 95%) on a $339,500 loan, which is 3% down on a $350,000 home:
| Credit score | LLPA | Cost on $339,500 |
|---|---|---|
| 780 and up | 0.125% | $424.38 |
| 740 to 759 | 0.500% | $1,697.50 |
| 700 to 719 | 0.875% | $2,970.63 |
| 660 to 679 | 1.250% | $4,243.75 |
| 639 and below | 1.750% | $5,941.25 |
Fannie Mae waives every LLPA for first-time buyers with income at or below 100% of the area median income (120% in high-cost areas). For a first-time buyer in the 620s or 630s who meets the income test, that waiver takes the biggest score penalty off the table.
Private mortgage insurance (PMI) is the other place the score shows up. PMI applies when you put down less than 20%. QualRate models it from about 1.50% a year near 620 down to about 0.46% a year at 760 and up. On the same $339,500 loan, that's about $424 a month at 620 and about $130 a month at 760, a gap of roughly $294 a month. On this $350,000 home, QualRate's model has Conventional with 3% down matching FHA's $2,720.39 payment at about a 740 score. Below that, FHA's flat mortgage insurance usually wins, and the affordability calculator shows both side by side for your numbers.
Conventional pricing uses the lowest middle score among all the borrowers. Fannie Mae accepts Classic FICO and, for approved lenders, VantageScore 4.0.
If your score sits near one of these lines and you want to know which program prices better, call AAA Capital Funding at 888-601-8344. We'll run FHA and Conventional on your numbers and you can compare them.
VA: no minimum set by VA
VA doesn't set a minimum credit score. It requires that you meet VA's credit standards and the lender's, so the floor is the lender's call. AAA Capital Funding does VA loans from a 500 score.
On VA, the score doesn't move your down payment or your insurance. There's no down payment, no monthly mortgage insurance, and the funding fee is the same at every score. What decides a VA approval is residual income, the money left each month after the house payment, debts, taxes and family living costs. The VA requirements guide explains how residual income works and where Florida falls on the VA residual income table.
USDA: the automated system decides
USDA's handbook, HB-1-3555, sets no minimum credit score. The USDA's Guaranteed Underwriting System (GUS) issues the recommendation and picks the score it uses. When GUS returns an Accept, there's no separate score validation. Most lenders set their own USDA floor around 640.
A buyer without a credit score can still use USDA through manual underwriting with nontraditional credit. With 12 months of verified rent, that means the rent history plus one more tradeline, such as a utility or insurance payment history. Without rent history, it takes three. Those loans have to stay inside USDA's standard 29% housing and 41% total debt ratios, with no ratio waivers.
DSCR investor loans
DSCR loans qualify a rental on its rent, and no agency sets the rules, so each lender picks its own score floor. Most programs start somewhere in the 620 to 680 range, and the score moves both the rate and the maximum LTV. The DSCR guide covers how the ratio works.
What a co-signer does and doesn't change
A co-signer (a non-occupant co-borrower, often a parent or grandparent) adds income to the application, which is the fastest fix when the debt-to-income ratio is the problem. It doesn't lift the score tier. FHA uses the lowest middle score among all borrowers, and so does Conventional pricing, so the co-signer's score needs to be at or above yours to keep you in the same tier. A parent on Social Security with a solid score is a common and strong combination. The co-signer calculator shows how much a co-signer's income adds.
AAA Capital Funding works every credit band and shops multiple wholesale lenders. Call 888-601-8344 and we'll go over what your score opens up, program by program, and you choose the one you like.