Can you qualify for a government loan with a 500 credit score? | SELFi

You applied for an FHA or VA loan, but your lender said your credit score is too low.

Here is the number one thing you need to know: The minimum credit score may be a lender overlay.

What are Lender Overlays?

Lender overlays are more stringent standards than investor guidelines set by Fannie Mae, FHA, and VA.

The most common lender overlay is minimum credit score.

Did you know that the true minimum credit score for FHA and VA loans is 500?

Most lenders will tell you that the minimum credit score is higher, often they say 580. But that is not true. It’s their minimum credit score.

Often lenders hide this fact because they hope you return to them when your credit score improves. Don’t wait.

Even with a credit score of 500, you can still get a terrific fixed rate.