Everyone Says You Need a 620 Score to Buy a House. Here's the Rule That Actually Applies
The Lender Who Said No
Everyone says you need a 620 score to buy a house. Juliana, a first-time buyer near Bonneau, SC, had heard it so many times she almost didn't bother applying. Her credit was sitting in the low 500s after a rough couple of years. When she finally worked up the nerve to talk to a lender, she got the answer she'd been dreading: you don't qualify.
A situation like Juliana's comes up often. Buyers assume there's one universal credit line, and once a single lender says no, they figure every lender will say the same thing. That assumption stops a lot of people from ever picking up the phone again.
What the Guideline Actually Says
Here is the FHA guideline, from HUD 4000.1, word for word:
"The Borrower's Minimum Decision Credit Score determines the maximum LTV available. If the Borrower's MDCS is at or above 580, the Borrower is eligible for maximum financing (96.5% LTV). If the MDCS is between 500 and 579, the Borrower is limited to a maximum LTV of 90 percent. Borrowers with non-traditional or insufficient credit histories are eligible for maximum financing but must be underwritten using manual underwriting procedures."
Read that again. There is no 620 cutoff anywhere in it. Two tiers exist below the widely quoted number people repeat. A score of 580 or higher opens the door to 3.5% down. A score between 500 and 579 still qualifies, just with a 90 percent loan-to-value limit, meaning a larger down payment. And borrowers with a thin or non-traditional credit file, not necessarily a low score, just not much history, can still reach maximum financing through manual underwriting.
Why Juliana Got a No Anyway
If the FHA floor is 500, why was Juliana told she didn't qualify? Often it comes down to lender overlays. Individual lenders are allowed to set their own internal minimums stricter than FHA's baseline, usually to manage their own risk tolerance. When that happens, a borrower hears "you don't qualify" and reasonably assumes that's the industry standard, when it's really just one company's policy.
This is the gap that catches credit-challenged buyers the most. The guideline and the overlay get blurred together, and buyers walk away from homeownership over a number that was never a hard rule to begin with.
The Question That Changes Everything
If you're in Juliana's position, there's one question that cuts through the confusion: ask the loan officer, "Can you tell me my Minimum Decision Credit Score and which FHA LTV tier that places me in, 96.5%, 90%, or does it require manual underwriting?"
That question forces a real answer. Either you get a specific tier tied to your actual score, or you find out you're dealing with an overlay rather than FHA's actual floor. Either way, you know where you stand instead of walking away on an assumption.
Finding the Path
I'm Jason Sharon, a licensed mortgage broker at Home Loans Inc, and my brand promise is simple: I find the path. Credit challenges are common, and the FHA guideline was written with exactly that reality in mind. Before you accept a no, get your actual Minimum Decision Credit Score and find out which tier it puts you in. Call 843-LOW-RATE and let's look at your file.
Home Loans Inc - Jason Sharon, Mortgage Broker. Company NMLS #1728740, Jason Sharon NMLS #1281448. Equal Housing Opportunity.
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