FHA credit score requirements can make the difference between waiting to buy and putting together a workable offer in the City of Richmond. The headline number is simple: FHA permits a 580 score for 3.5% down, while scores from 500 to 579 generally require 10% down. The practical answer is more detailed, because lenders can set their own approval standards, and your score is only one part of the file.
Duane Buziak, NMLS #1110647
For scale, the 2020 Decennial Census counted 226,610 residents in the City of Richmond. That means a wide range of buyer profiles are competing for the same housing stock: first-time buyers rebuilding credit, self-employed buyers with strong income but uneven credit history, and move-up buyers deciding whether FHA or conventional financing is the cleaner fit.
Table of Contents
- FHA minimum scores and lender overlays
- What your score changes beyond approval
- FHA versus conventional financing
- A worked Richmond purchase example
- How to prepare before applying
- FHA credit score requirements FAQ
FHA credit score requirements: the baseline and the real-world test
The FHA baseline is set in its published mortgage rules. A borrower with a 580 middle credit score may qualify with a 3.5% down payment. A borrower between 500 and 579 may still be eligible under FHA rules, but needs at least 10% down. Below 500, FHA financing is not available.
That does not mean every lender will approve every 580-score applicant. Many lenders add overlays, which are their own credit-score, debt-ratio, manual-underwriting, or recent-credit-event requirements. An overlay is not an FHA rule. It is a lender’s risk policy, and it can remove an otherwise eligible buyer from consideration.
This is why a declined application at one lender should not automatically end the conversation. As a broker and lender, Duane can evaluate FHA underwriting through a broad wholesale-lender network while protecting the first review with a NoTouch Credit Pull soft-pull pre-approval. You can see where you stand without starting with a hard inquiry and its potential credit impact.
Your middle score usually controls
If you have three credit scores, mortgage underwriting generally uses the middle score. With two scores, it uses the lower one. If two borrowers are applying, the lender typically qualifies the loan using the lower borrower’s applicable score.
For example, a buyer with scores of 574, 589, and 601 is generally evaluated at 589. That clears FHA’s 580-and-3.5%-down threshold, assuming the rest of the loan meets underwriting standards. A co-borrower with a lower qualifying score can change that result, even if the primary buyer has excellent credit.
A 580 score is not the same as an automatic approval
FHA was designed to make responsible homeownership more accessible, not to ignore credit risk. Underwriters still review payment history, collections, recent late payments, bankruptcies, foreclosures, debt-to-income ratio, cash to close, employment, and the property’s condition.
A 580 score built after one old medical collection is a different file from a 580 score with recent 30-day late payments, high revolving balances, and no documented reserves. The score opens the FHA door. The credit story determines how comfortably you walk through it.
What a higher score can change on an FHA loan
The down payment threshold is the most visible credit-score rule, but it is not the only financial consequence. A stronger score may improve the interest-rate options available through a particular lender and can make debt-ratio approval easier. It may also give you a better reason to compare FHA with a conventional loan.
FHA mortgage insurance is standardized more than conventional private mortgage insurance, but pricing and underwriting still vary by lender, loan term, and risk profile. FHA charges an upfront mortgage insurance premium, commonly 1.75% of the base loan amount, plus annual mortgage insurance paid monthly. For many buyers making less than 10% down, that monthly FHA insurance remains for the life of the loan unless they later refinance.
That trade-off can be worthwhile when FHA gets you approved sooner, preserves cash, or provides a better path through a recent credit setback. It is less attractive when your credit profile is already strong enough for a low-down-payment conventional loan with cancellable mortgage insurance.
FHA versus conventional for Richmond homebuyers
| Decision point | FHA loan | Conventional loan |
|---|---|---|
| Typical minimum score | 580 for 3.5% down under FHA baseline rules | Often 620, with pricing improving as scores rise |
| Minimum down payment | 3.5% with a qualifying 580+ score | Often 3% to 5% for eligible buyers |
| Mortgage insurance | Upfront and monthly FHA mortgage insurance; often lasts for the loan term | Private mortgage insurance may be removed once eligibility requirements are met |
| Credit flexibility | Often more forgiving after credit challenges or with limited credit depth | Usually rewards stronger scores, lower debt, and cleaner payment history |
| Property standards | FHA appraisal includes minimum property-condition requirements | Appraisal focuses primarily on value and marketability |
| Best fit | Buyers prioritizing credit flexibility and a lower cash down payment | Buyers with stronger credit seeking long-term insurance flexibility |
The 2026 one-unit conforming loan limit in Richmond is $832,750, so most city purchases fit within conventional conforming financing from a loan-size perspective. The better program decision usually comes down to credit, down payment, monthly payment, property condition, and how long you expect to keep the loan.
Worked example: a $350,000 Richmond FHA purchase
Assume you are buying a City of Richmond home for $350,000 with a 590 qualifying score. You choose FHA with 3.5% down and a 30-year fixed rate of 6.50%. This example is for illustration, and it excludes homeowners insurance, property taxes, and any HOA dues.
Your down payment is $12,250: $350,000 multiplied by 3.5%. Your base loan amount is therefore $337,750. The 1.75% upfront mortgage insurance premium equals $5,910.63, which is financed into the loan. Your starting loan balance becomes $343,660.63.
At 6.50%, principal and interest is approximately $2,172 per month. Assuming annual FHA mortgage insurance of 0.55% of the base loan amount, monthly mortgage insurance is approximately $155. Your combined monthly principal, interest, and FHA mortgage insurance is $2,327.
Over the first five years, you would make approximately $130,320 in principal-and-interest payments plus $9,288 in monthly mortgage insurance, for a total of $139,608 before taxes and homeowners insurance. The financed upfront mortgage insurance premium is another $5,911. Your five-year financing cost is not simply the monthly payment total because part of each payment reduces principal, but this math clearly shows the cost of FHA insurance alongside the benefit: you entered the purchase with $5,250 less down than a 5%-down option would require.
A conventional comparison may beat this payment over time if your score, debt ratio, and private-mortgage-insurance pricing are favorable. It may not if conventional pricing is materially higher. That is why the right answer is a side-by-side quote built from your actual credit file, not a generic score chart.
How to improve an FHA file before you write an offer
Start by checking for errors, then focus on changes that can move the score or improve underwriting quickly. Paying revolving balances down is often more productive than opening a new account. Avoid closing older cards, financing furniture or a vehicle, or moving money between accounts without a clear paper trail before closing.
If a late payment, collection, or disputed account needs explanation, documentation matters. Underwriters want a clear timeline, a credible reason for the issue, and evidence that the problem is resolved or no longer recurring. A buyer who has re-established on-time housing and installment payments can be stronger than a score alone suggests.
Do not assume you need to wait until you reach 620. A 580-plus FHA borrower may be ready now, while a buyer near that line may benefit from a targeted paydown plan and a re-check. The useful question is not, “What score do I need someday?” It is, “What program gives me the cleanest approval and best ownership cost for this purchase?”
FHA credit score requirements FAQ
What credit score do I need for an FHA loan?
A 580 score can qualify for 3.5% down under FHA baseline rules. Scores from 500 to 579 generally require 10% down, subject to lender approval standards.
Can I get an FHA loan with a 550 credit score?
Possibly, but FHA’s baseline calls for a 10% down payment in the 500-579 range. Many lenders apply higher internal score requirements.
Does FHA use the highest credit score?
No. Mortgage underwriting generally uses the middle score when three scores are available, or the lower score when two scores are available.
Can a co-borrower’s lower score hurt FHA approval?
Yes. When two borrowers apply, qualification commonly uses the lower applicable score, which can affect program eligibility and pricing.
Is 620 required for FHA?
No. FHA’s baseline minimum for 3.5% down is 580. Some lenders may require 620 or another higher score as an internal overlay.
Does FHA mortgage insurance go away?
With less than 10% down, FHA mortgage insurance commonly remains for the life of the loan. Refinancing into conventional financing can be a future option if eligible.
Can I use FHA for a Richmond condo?
Yes, if the condo project and unit meet FHA eligibility rules. Condo approval should be checked early, before you rely on FHA financing in an offer.
Will a soft credit pull affect my score?
A soft pull is designed not to create the hard-inquiry credit impact associated with a full mortgage credit report. It is a useful first step when you need program clarity.
A score is a starting point, not a verdict. Get the file reviewed before you make an offer, compare FHA against conventional with the same purchase assumptions, and choose the loan that supports both your approval and your next five years of ownership.
Legal disclaimer: This article is for educational purposes only and is not a commitment to lend, credit decision, or financial, legal, or tax advice. Loan approval, rates, mortgage insurance, and program eligibility depend on verified credit, income, assets, occupancy, property, lender guidelines, and market conditions. Equal Housing Opportunity.
Duane Buziak, Mortgage Maestro | NMLS: 1110647 | Licensed in VA · FL · TN · GA | UWM PRO ELITE 2025 | UWM Top 20 Purchase LO Virgi
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