Your credit score is a snapshot of your financial habits: how you handle debt, make payments, and manage credit overall. Scores typically range from 300 to 850, with higher numbers reflecting stronger creditworthiness. According to the Consumer Financial Protection Bureau, lenders may pull slightly different versions of your score depending on the loan product, so the number you see on a free app isn't always the exact number your mortgage lender uses.
Here's what goes into calculating your credit score:
Before applying for a home loan, check your credit report through free tools like AnnualCreditReport.com, the only site authorized by federal law to provide free annual credit reports from all three bureaus. If you spot inaccuracies or outdated information, dispute them immediately, since fixing even small errors can raise your score and improve your loan options.
Credit scores influence everything from your interest rate to down payment requirements. While you don't need a perfect 850 score, higher scores unlock better terms. Borrowers with a 580 credit score may still qualify for financing, especially through FHA, VA, or non-QM loans designed for flexibility. For instance, an FHA loan with a 580 credit score allows for just 3.5% down, compared to 10–20% required by most conventional lenders. Over time, these savings can make homeownership far more achievable.
One thing worth knowing before you apply: the Department of Housing and Urban Development (HUD) sets the minimum FHA requirements, but individual lenders are allowed to layer their own stricter standards on top, often called "overlays." That's why one lender might turn down a 580 score while another approves it without hesitation. If you're denied by one lender, it doesn't necessarily mean you don't qualify for an FHA loan. It may just mean that lender's overlay is higher than FHA's baseline. Working with a broker like Mares Mortgage, who shops your file across multiple lenders instead of just one, can make the difference between a denial and an approval.
To qualify for an FHA home loan, potential homeowners must have a minimum FICO score of 580. This score also entitles borrowers to the low down payment benefit of only 3.5%. If your score is below 580, you aren't out of luck. You may still qualify for an FHA loan but have to pay a slightly higher down payment of 10%.
The Federal Housing Administration (FHA) offers one of the most popular low-credit home loan programs. To qualify, you'll generally need:
If your score is below 580, you may still qualify with a 10% down payment.
We help our clients to get low rates and the best mortgage deals possible. Are you looking for a mortgage broker? Explore FHA loan options at Mares Mortgage today!
FHA loans come with mortgage insurance premiums (MIP): both an upfront premium and an annual premium built into your monthly payment. This is what allows FHA to offer relaxed credit requirements in the first place: the insurance protects the lender, not you, if you default. Unlike conventional loans, FHA MIP typically can't be removed once you hit 20% equity if your down payment was under 10%; you'd need to refinance into a conventional loan later to drop it. It's a real cost, but for many 580-score borrowers, it's still cheaper than waiting years to qualify for a conventional loan, especially with rent also rising in the meantime.
Each year, HUD adjusts how much you can borrow with an FHA loan. For 2026, the national floor for a one-unit property is $541,287, and the ceiling in high-cost counties rises to $1,249,125. Where your county falls in that range depends on local home prices, so it's worth confirming your area's exact limit with your loan officer before you start house hunting.
If you're a first-time homebuyer or working to rebuild your credit, FHA loans can open the door to homeownership without the strict requirements of conventional loans. These government-backed loans are designed to make buying a home more accessible and affordable for people with moderate incomes or less-than-perfect credit. They offer flexible terms and protections that help borrowers start building long-term financial stability. The FHA's home loans are insured by them so that lenders can be more relaxed in their requirements.
FHA home loans have many benefits for borrowers, including the following:
FHA loans make it possible for people to own homes without being burdened by them.
FHA loans are especially helpful for first-time homebuyers or those rebuilding credit. Learn more in our related post: Are Condos a Good Investment?
Home loans provided by the U.S. Department of Veteran Affairs are for service members, military-affiliated people, and eligible spouses. VA loans don't require any down payment or mortgage insurance, and they often give the lowest interest rates on the market. The Department of Veterans Affairs (VA) guarantees loans for eligible active-duty service members, veterans, and certain surviving spouses.
VA loans come with some of the best mortgage benefits available:
Because VA loans don't have risk-based pricing, borrowers with a 580 credit score may still receive the same interest rate as those with higher scores, saving thousands over the life of the loan.
Most VA borrowers will also pay a one-time VA funding fee, which helps keep the program running without monthly mortgage insurance. The fee can often be rolled into the loan itself rather than paid out of pocket, and it may be waived entirely for veterans receiving VA disability compensation.
To confirm eligibility, visit the official VA Home Loan eligibility page or ask your Mares Mortgage broker to help you obtain your Certificate of Eligibility (COE). You can also explore VA loan options at Mares Mortgage to see current rates and terms.
Related: Questions to Ask a Mortgage Lender
The final kind of mortgage available to those with low credit scores is the non-qualified mortgage. The qualified mortgage rule, also called the QM Rule, was established in 2014. The federal government set out the requirements for the loans, which were designed to protect home-buyers from high-risk mortgage products.
If you're self-employed, recently changed jobs, or have non-traditional income sources, a non-qualified mortgage (non-QM) might be your best fit.
These loans don't follow standard federal guidelines but still offer safe and responsible lending terms.
Like the FHA loan, non-QM loans are more readily available to people with a score of at least 580. Non-QM loans are growing in popularity across California, giving buyers more freedom when traditional options fall short. Take a look at non-QM loan options at Mares Mortgage to see if this path fits your situation.
Even with a 580 credit score, a few simple steps can help strengthen your application:
You can also check out our guide: Refinancing With Bad Credit for strategies to rebuild your score before applying, or read Boost Your Credit Score Before Applying for a Loan for a step-by-step pre-approval checklist.
Can I buy a house in California with a 580 credit score? Yes. A 580 score meets the minimum for FHA financing with 3.5% down, and many lenders accept 580 or lower for VA and non-QM loans as well. Lender requirements do vary, so working with a broker who compares multiple lenders improves your odds.
Will a 580 credit score get me a good interest rate? Not typically the best rate available, but VA loans don't use risk-based pricing, so eligible borrowers can get the same rate regardless of score. FHA and non-QM rates are more score-sensitive, which is why improving your score even slightly before applying can help.
How much down payment do I need with a 580 credit score? With FHA, 3.5% down. With VA, potentially $0 down if you're eligible. With non-QM, down payment requirements vary by lender and income documentation type.
Is it better to wait and improve my credit before buying? It depends on your local market and rent costs. If you can qualify today with a program like FHA or VA, waiting to chase a slightly better rate may cost more in rising home prices than it saves in interest. A broker can run both scenarios side by side.
A 580 credit score doesn't have to stand between you and your dream home. With the right mortgage program, whether FHA, VA, or non-QM, you can secure financing that fits your goals.
At Mares Mortgage, we specialize in helping borrowers with all types of credit backgrounds find affordable, realistic loan options.
Do you still have questions? Despite your credit score, we can help you find a suitable mortgage and reach your financial goals. Contact Mares Mortgage today!
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