In a March 2026 survey of people planning to buy within three years, 57% believed they needed at least a 660 credit score. A third believed the floor was 700. Meanwhile the actual FHA guideline has said the same thing for years: 580 gets you a mortgage with 3.5% down. Even 500 to 579 can qualify with 10% down.
About one in six American adults has a score at or below 620. Most of them have simply never applied.
Why the confusion exists
Both things are true at once: the guideline says 580, and the bank you walked into says no. Most big lenders layer their own requirements, called overlays, on top of FHA’s rules, and 620 to 640 is a common in-house floor. The bank isn’t lying to you about its minimum. It just isn’t telling you that a different lender honors the real one.
That’s the case for shopping, and it’s the specific thing a broker does that a single bank can’t: find the lenders whose floor matches your score. Credit unions and smaller lenders are often the ones who’ll work at 580.
The numbers back up the gap. The average approved FHA borrower scored 679 last year. Across all mortgages, conventional included, the median origination score was 775. Read those as evidence that higher-score borrowers dominate the market, not that they’re required to. FHA’s own reporting shows sub-620 approvals ticking up, not down.
The quiet advantage FHA gives low scores
Here’s the structural fact almost nobody explains. FHA’s mortgage insurance is flat: a 580 borrower pays the exact same premium as a 780 borrower, 1.75% upfront and typically 0.55% a year.
Conventional loans work the opposite way. Private mortgage insurance is priced by score, and steeply. On a $400,000 home with 5% down, PMI can run about $60 a month with excellent credit and closer to $355 a month in the low 600s. Conventional also won’t take you at all below 620, per Fannie Mae’s own guide.
So at 580 the question isn’t “can I get a decent deal anywhere?” It’s “FHA, through a lender without overlays.” Your rate will run higher than a 740 borrower’s, that part is real. The insurance, the bigger monthly bite at low scores, won’t be.
Veterans have another path: VA loans have no official minimum score at all, and lenders can approve strong files at 580-600 based on residual income, the cash left over each month after your bills.
If you’re close, the jump is worth it
Two moves change scores fast. Credit card utilization updates within a single billing cycle, so paying balances down from half your limit to under 10% often moves a score meaningfully in a month. And when timing is tight, a lender can order a rapid rescore that pushes those updates through in two to five business days. You can’t order one yourself. Only a lender can.
Check your reports too. A federal study found one in five people had an error on at least one report. Most disputes don’t move scores much, so treat it as housekeeping rather than a miracle, but the ones that hit, hit.
In Michigan the 640 mark is worth targeting specifically, because that’s where MSHDA’s $10,000 down payment assistance unlocks. At 580 you can buy. At 640 the state helps pay for it.
The only real answer
Guideline floors, overlay gaps, insurance math: none of it tells you whether your file works. That takes someone pricing it, which costs nothing and starts with sixty seconds of questions. No credit check involved, so checking can’t hurt the score you’re worried about.
Sources: Veterans United survey, March 2026 · FHA requirements (HUD Handbook 4000.1) · FHA FY2025 Annual Report coverage · NY Fed Household Debt and Credit, Q1 2026 · Fannie Mae Selling Guide minimum scores · Experian PMI cost data · VA credit minimums · Experian on rapid rescore · FTC credit report accuracy study · Experian FICO distribution