Qualifying for a Mortgage with a Low Credit Score

Minimum credit scores by program

• FHA (3.5% down): 580 minimum. The most accessible standard program for borrowers with lower scores.
• FHA (10% down): 500–579. Higher down payment required, but still available for borrowers with significant credit challenges.
• VA: No official VA minimum, but most lenders require 580–620. VA is the most flexible program for eligible veterans.
• USDA: 640 minimum for automated underwriting. Manual underwriting may be available below 640 with strong compensating factors.
• Conventional: 620 minimum. Rates and fees increase significantly as scores drop below 680.
• Jumbo: Typically 700–720 minimum. Non-QM jumbo products may go lower with larger down payments.

How credit score affects your rate

Credit score is one of the primary factors in mortgage pricing. For conventional loans, Fannie Mae and Freddie Mac apply loan-level price adjustments (LLPAs) that increase the effective rate as scores decrease. A borrower with a 620 score may pay 1–2% more in rate than a borrower with a 760 score on the same loan.

FHA pricing is less sensitive to credit score — the MIP structure means the rate difference between a 580 and a 700 score is smaller than on conventional. This is one reason FHA is often the better choice for borrowers with scores in the 580–640 range.

Quick credit improvement strategies

If your score is close to a program threshold, targeted improvements can make a significant difference in 30–90 days:

• Pay down revolving balances: Credit utilization (balance-to-limit ratio) is the fastest-moving factor. Getting utilization below 30% — ideally below 10% — can add 20–50 points quickly.
• Dispute errors: Incorrect negative items on your credit report can be disputed and removed. Even one removed collection account can move a score significantly.
• Avoid new credit applications: Each hard inquiry reduces your score slightly. Don't apply for new credit in the months before a mortgage application.
• Don't close old accounts: Closing accounts reduces available credit and can increase utilization.

Morgan Hardy can run a credit analysis and identify the specific actions most likely to improve your score before you apply.