What FHA guidelines say about 580
FHA loans are backed by the Federal Housing Administration, which lets lenders accept lower scores and smaller down payments than many other loans. Under FHA guidelines, a score of 580 or higher can qualify for the minimum 3.5% down payment. Scores from 500 to 579 generally need 10% down.
Those are FHA's floors, not promises. Each lender can add its own rules, called overlays, and many set a higher minimum score.
CapCenter's minimum score
You need a credit score of at least 620 for a CapCenter loan. If your score is around 580 today, raising it can open CapCenter's programs, including FHA at 3.5% down, and can also lower your cost. A loan consultant can review your options with a soft credit check, which doesn't affect your score.
Options lenders may consider at 580
- FHA with 3.5% down is the most common path at this score.
- VA loans, for eligible service members and veterans, depending on the lender's own minimum.
- Conventional loans usually need at least 620, so they're generally out of reach at 580.
- Some down payment assistance programs set their own score minimums.
What else lenders look at
Your score is one part of the picture. Lenders also weigh:
- Steady, documented income
- Your debt-to-income ratio, or how much of your income goes to debts
- On-time payments over the last 12 months, especially rent
- Savings left after closing
- Any recent collections, bankruptcy or foreclosure
What FHA costs
FHA loans carry mortgage insurance: an upfront premium, which is usually added to the loan, and an annual premium paid monthly. FHA's annual premium generally depends on your loan size, down payment and term rather than your credit score. A lower score can still mean a higher interest rate.
How to raise your score before you apply
Even a 20- to 40-point increase can change your options. Steps that often help:
- Pay credit card balances down well below their limits.
- Pay all your bills on time from here on.
- Check your credit reports for errors and dispute them.
- Avoid opening new accounts before you apply.
- Don't close old cards, since they help your credit history.
A simple plan
Start by checking your score and reports. Pick one or two changes, like paying down a card, and give them a few months to show up. Then talk with a loan consultant about which programs fit your score, savings and timeline.