What is the minimum credit score required to qualify for an FHA loan?

The minimum credit score required to qualify for an FHA loan is indeed 500. The Federal Housing Administration (FHA) has established various guidelines when it comes to credit scores, and while a score of 500 allows for eligibility, it typically comes with certain restrictions, such as requiring a larger down payment of at least 10%. Borrowers with credit scores of 580 or higher may qualify for a lower down payment of 3.5%. Therefore, understanding these thresholds is crucial for lenders and borrowers alike when considering FHA loans.

While a score of 580 is often emphasized due to the preferable terms associated with it, the minimum standard for those with lower scores still starts at 500. This flexibility in credit score requirements makes FHA loans an accessible option for many borrowers who may have less than perfect credit histories.