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The 500–579 lane, stated plainly
FHA’s own rules permit a purchase at 500–579 credit with 10% down — but many lenders overlay a 620 floor and never look at the file. This program underwrites 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, that was a lender overlay talking, not FHA.
Below-620 refinances: the path almost nobody advertises
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. If your current loan is FHA, it should be the first question you ask any lender.
The program in plain numbers
| Term | FHA |
|---|---|
| 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 |
| 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 (can be financed) plus annual MIP set by HUD; life-of-loan at maximum LTV |
| Occupancy / where | Primary residences only · 30 states — see the list |
One honest caveat
FHA mortgage insurance at maximum LTV lasts the life of the loan. Borrowers who can reach conventional terms — now or later — often start FHA and refinance out once credit and equity allow. See the conventional below-620 guide for the other side of that decision.
