FHA With a 500 Credit Score. The guides explain the rule — we actually do the loan.
Every article online recites the same fact: FHA technically allows 500–579 credit with 10% down. Then the fine print — “but most lenders require 620.” That gap between what FHA allows and what lenders will touch is exactly where we work: real FHA lending down to a 500 score, plus below-620 refinance paths most borrowers are never told exist.
- 580+ credit: 3.5% down. 500–579: 10% down — and we mean it, not a footnote
- Below-620 refinances accepted at any LTV — including cash-out; the file is reviewed on a call
- FHA Streamline: existing FHA loan → no income documentation, typically no appraisal
- Primary residences · 21 states · no hard credit pull to see options
Written by the Cap Rate Funding team, Irvine, CA · Last reviewed: August 27, 2026 · Questions? Call/text 949-738-9770
Cap Rate Funding (powered by Federal First Lending LLC, NMLS #2381991) is an Irvine, California brokerage doing FHA loans on primary residences in 21 states: 3.5% down at 580+ credit, 10% down at 500–579, cash-out refinancing to 80% LTV, FHA Streamline refinances with no income documentation and typically no appraisal — and below-620 refinances accepted at any LTV. Rated 5.0 on Google by real clients.
The 500–579 lane, stated plainly
FHA’s own rules permit a purchase at 500–579 credit with 10% down — but most lenders overlay a 620 floor and never look at the file. We underwrite the lane FHA actually wrote: 10% down, primary residence, and the rest of the file doing its part. At 580 and above, the door widens to 3.5% down. If you’ve been quoted “620 minimum” as if it were federal law, it wasn’t FHA talking — it was that lender’s overlay.
Below-620 refinances: the path almost nobody advertises
Here’s the rule that surprises people: with us, FHA refinances below 620 credit — including cash-out — are accepted at any LTV, with the file reviewed on a call. Compare that with conventional’s below-620 refinance line (balance under 65% of value) and you’ll see why FHA is often the rescue route for a low-score homeowner with thinner equity. Cash-out runs to 80% LTV on an owner-occupied home with no mortgage lates in the last 12 months.
FHA Streamline: the refinance with almost no file
Already have an FHA loan? The Streamline refinance requires no income documentation and typically no appraisal — the qualifying test is a net tangible benefit to you. It’s one of the lightest-paperwork refinances in existence, and if your current loan is FHA, it should be the first question you ask any lender.
The program in plain numbers
| Term | FHA at Cap Rate Funding |
|---|---|
| Down payment, 580+ credit | 3.5% |
| Down payment, 500–579 credit | 10% |
| Below-620 refinances (incl. cash-out) | Accepted at any LTV — file reviewed on a call |
| Below-620 purchase alternative | 20%+ down can proceed |
| Cash-out refinance | 80% LTV, owner-occupied, no mortgage lates in last 12 months |
| FHA Streamline | Existing FHA loan; no income docs; typically no appraisal; net tangible benefit required |
| Mortgage insurance | 1.75% upfront MIP (financed); annual MIP by HUD tiers — 0.50%/0.55% up to a $726,200 base loan, 0.70%/0.75% above; life-of-loan at maximum LTV |
| Occupancy / where | Primary residences only · 21 states — see the list |
One honest caveat, because it decides real choices: FHA’s MIP at maximum LTV lasts the life of the loan. Borrowers who can reach conventional’s terms — now or later — often start FHA and refinance out once credit and equity allow. See our conventional below-620 guide for the other side of that decision.
Common questions
Can I really get an FHA loan with a 500 credit score?
Yes — FHA permits 500–579 credit with 10% down on a primary residence, and unlike most lenders we underwrite that lane rather than overlaying a 620 floor. At 580+ the down payment drops to 3.5%. The rest of the file still matters, and we review it honestly on a call.
Can I refinance FHA with bad credit?
Below-620 FHA refinances — including cash-out — are accepted with us at any LTV, with the file reviewed on a call. And if your current loan is already FHA, the Streamline needs no income documentation and typically no appraisal at all.
What is an FHA Streamline refinance?
A refinance of an existing FHA loan with no income documentation and typically no appraisal — the test is a net tangible benefit to you. One of the lightest-paperwork refinances there is.
How much is FHA mortgage insurance?
1.75% upfront (financed into the loan) plus annual MIP by HUD tiers: 0.50%/0.55% on base loans up to $726,200 and 0.70%/0.75% above. At maximum LTV it lasts the life of the loan — the honest trade against FHA’s credit flexibility, and the reason many borrowers later refinance to conventional.
Can I do an FHA cash-out refinance?
Yes — to 80% LTV on an owner-occupied home with no mortgage lates in the last 12 months. Below 620 credit, cash-out refinances are still accepted, at any LTV, reviewed on a call.
Will checking my options hurt my credit?
No — a soft credit review only. A hard inquiry happens later, with your permission, only if you move forward.
Not a commitment to lend. FHA guidelines and HUD MIP tiers change without notice; figures confirmed in writing for your file. All loans subject to credit approval. Equal Housing Opportunity.