What credit score does FHA require?
HUD sets two tiers in Handbook 4000.1: 580 and above gets the minimum 3.5% down payment, and 500-579 qualifies with 10% down. Below 500, the program isn't available.
Those floors are the most credit-forgiving rules among the major loan programs, and they're real. What they are not is a promise: meeting a floor starts the conversation with an underwriter, it doesn't end it. Your income, debt-to-income, payment history, and the rest of the file all get weighed, and the lender making the loan applies its own standards on top, which is the next section and the part most articles skip.
Can you get an FHA loan with a 500 to 579 score?
The program allows it with 10% down, per HUD Handbook 4000.1. The honest caveat: relatively few lenders fund in that tier, because their overlays sit above it.
So treat the 500-579 lane as real but narrow. If you're in it, two parallel moves make sense: I shop the file to the lenders whose overlays genuinely reach lowest, and we map what would lift your score into the 580+ lane, where the down payment drops to 3.5% and the lender pool widens dramatically. Sometimes the second move is only a few months of targeted work, and the difference in options is night and day.
Why do lenders require a higher score than FHA's floor?
Because they're allowed to, and because their own risk and operational rules push them there. A lender overlay is the lender's minimum sitting above the program's, and overlays commonly land in the low-to-mid 600s, varying shop to shop.
This is the single most useful thing to understand about FHA credit: "FHA allows 580" and "this lender approves at 580" are different sentences. The same file can be declined at one lender and funded at another with nothing about you changing in between. Overlays are exactly why I shop 100+ lenders rather than forcing your file through one shop's box, and why one "no" should never be the end of your search, or your story.
What is manual underwriting on an FHA loan?
When the automated system (HUD's TOTAL Scorecard) doesn't approve a file, a human underwriter can still review and approve it manually, under tighter ratios with documented compensating factors, per HUD Handbook 4000.1.
Manual underwrites are slower and more paperwork-heavy, and they're also how real-world files with stories, thin credit, a rough patch with a clear cause and recovery, get to yes after the algorithm shrugged. Compensating factors carry the weight: reserves after closing, low payment shock versus your current rent, residual income. If your situation reads better to a human than to a scorecard, the manual path is a feature of FHA, not a consolation prize.
What actually strengthens a lower-credit FHA file?
The things underwriters weigh, per 4000.1: twelve months of clean payment history, a debt load paid down below the squeeze point, documented reserves, and stable income. After a bankruptcy or foreclosure, HUD's general waiting periods apply first, with lender overlays on top; the timelines live on the full FHA requirements guide.
What I won't do is promise approval at any score, because nobody honest can. What I will do: tell you exactly where your file stands against the overlays lenders are actually using, what specifically is holding it back, and a realistic timeline if now isn't the moment. No credit-repair upsell, no "just apply and see." Veterans of this conversation buy once, at the right time, and thank themselves for the months they spent getting ready.