If your credit score has taken a hit, buying a home might feel out of reach—but it’s not. Thanks to FHA loans, homeownership is still possible even if you have bad credit.
Verify Your FHA Loan Eligibility
In this guide, we’ll show you how to qualify for an FHA loan with bad credit, what lenders look for, and the steps to take next.
Whether your score is in the low 600s or even below 580, this guide breaks down everything you need to know.
An FHA loan is a mortgage backed by the Federal Housing Administration. It was created to help people with lower credit scores, limited savings, or non-traditional income become homeowners.
Because the FHA insures the loan, lenders are more willing to approve borrowers who might not qualify for a conventional mortgage.
Benefits of an FHA Loan:
Lower credit score requirements.
Down payments as low as 3.5%.
Flexible guidelines for income and debt.
Allowance for gift funds and down payment assistance.
Yes, you can get an FHA loan with bad credit. FHA guidelines are specifically designed for buyers who don’t have perfect credit.
FHA Credit Score Requirements:
580 or higher: Eligible for 3.5% down payment.
500 to 579: Eligible with 10% down payment.
Below 500: Not eligible for FHA financing.
Keep in mind, these are minimums set by the FHA. Individual lenders can set their own higher standards, known as “overlays.” That’s why getting denied by one lender doesn’t mean you're denied everywhere.
Generally, a FICO score under 580 is considered “bad” credit for FHA purposes, but many borrowers with scores between 500 and 620 still qualify.
Here’s how FHA lenders typically view credit scores:
| Credit Score Range | FHA Loan Eligibility |
|---|---|
| 500 – 579 | Eligible with 10% down |
| 580 – 619 | Eligible with 3.5% down |
| 620 – 679 | Still considered subprime by some lenders |
| 680+ | Standard eligibility |
Even with bad credit, there are ways to strengthen your application. Here’s what lenders consider besides your credit score:
The larger your down payment, the less risk you present. Using gift funds or down payment assistance is allowed with FHA loans.
Lenders want to see steady income for at least two years. Gaps in employment should be explained but aren't deal-breakers.
Most lenders prefer a DTI below 43%, though some go up to 50%. Paying down debt before applying can improve your odds.
A strong record of on-time rent payments helps show you’re ready for homeownership.
If your score is under 580, your loan will likely go through “manual underwriting,” which means a more detailed review of your finances.
FHA loans offer second chances.
Chapter 7 Bankruptcy: You may qualify after 2 years from discharge.
Chapter 13 Bankruptcy: You may be eligible after 12 months of on-time payments with court approval.
Foreclosure: You can apply for an FHA loan after 3 years, sometimes sooner with extenuating circumstances.
To get approved for an FHA loan with bad credit, you’ll need to provide:
Recent pay stubs
W-2s or 1099s
Tax returns (2 years)
Bank statements
Photo ID
Rental history (if applicable)
Letter of explanation for low credit or major events (optional but helpful)
Interest rates for FHA loans are usually lower than conventional loans—but with bad credit, your rate might be slightly higher than someone with excellent credit.
The good news? FHA rates are still competitive even with lower scores. Working with a lender that specializes in FHA loans for bad credit can make a big difference.
If your credit score is on the lower end, here are steps to improve your chances:
Check Your Credit Report: Dispute any errors and make sure everything is accurate.
Pay Down Credit Card Balances: Reducing your credit utilization can raise your score quickly.
Get Pre-Approved Early: Know where you stand before house hunting.
Write a Letter of Explanation: Tell your story—especially if job loss or medical issues caused your score to drop.
Compare FHA Lenders: Not all lenders treat bad credit the same—some have more flexible guidelines.
Even with poor credit, you might qualify for help with your down payment. Options Include:
Local housing finance agencies
State-sponsored programs
Nonprofit organizations
Employer homebuying programs
Each program has its own eligibility rules, but many accept credit scores as low as 580.
Loan limits vary by county and are updated each year. In most areas, the 2025 FHA loan limit for a single-family home is:
Low-cost areas: $498,257
High-cost areas: Up to $1,149,825
Check your county's specific limit to see how much you can borrow.
The property must meet FHA safety and livability standards. Eligible property types include:
Single-family homes
Approved condos
Manufactured homes (with permanent foundation)
Multi-unit homes (up to 4 units, if you live in one)
The home must be your primary residence. No investment properties allowed.
Here’s how FHA loans compare to other options:
| Loan Type | Minimum Credit Score | Down Payment | Best For |
|---|---|---|---|
| FHA | 500 (10% down), 580 (3.5%) | 3.5% – 10% | Low credit buyers |
| VA | No official minimum | 0% | Veterans, active duty |
| USDA | 640 recommended | 0% | Rural and small-town buyers |
| Conventional | 620+ usually required | 3%+ | Buyers with stronger credit |
Ready to take the next step? Here’s how to get started:
Check your credit.
Gather your documents.
Get pre-approved by an FHA lender.
Work with a real estate agent who understands FHA rules.
Find a qualifying home.
Complete the loan process and close.
Having bad credit doesn’t mean you can’t become a homeowner. FHA loans with bad credit are designed to give you a fair shot—whether you’re rebuilding after a tough time or just starting out.
By understanding your options, comparing lenders, and preparing your finances, you can turn your dream of homeownership into reality.
When it comes to getting approved for an FHA loan with bad credit, experience matters. We specialize in helping people who’ve been told “no” turn that into a “yes.”
We’ve helped thousands get approved for FHA loans—many with credit scores below 600. Our reputation is built on real results and real success stories.
We don’t just understand FHA loans—we live and breathe them. Our team knows the ins and outs of bad credit approvals, manual underwriting, and down payment assistance programs.
We believe everyone deserves a shot at homeownership. You’ll never be judged for your credit history—only supported in finding a path forward.
We can tell you where you stand in minutes. No hard credit pull required to get started.
You’re not just another number. We work with you one-on-one to create a custom plan based on your unique financial situation and homeownership goals.
Let’s see what’s possible—even if your credit isn’t perfect.
