What the agencies actually say
FHA publishes the line. At 580 and above you are eligible for maximum financing at 96.5 percent loan-to-value. Between 500 and 579 the ceiling is 90 percent, so the down payment is 10 percent instead of 3.5. Below 500 there is no FHA loan.1
VA does not publish one, because it does not have one. The regulation requires that the decision rest on “a careful analysis of the available credit data” — payment patterns, delinquencies, and the circumstances behind them.2 There is no threshold in it at all, which is covered at length on the VA page.
So where does 620 come from?
From lenders. A minimum of 620 or 640 on an FHA loan is an overlay — one company's risk appetite layered on top of the agency's rule. It is legal, it is common, and it is not FHA policy.
The practical consequence is that a decline in this band tells you about one lender, not about the market. A retail loan officer has one set of overlays to work with; that is the whole difference, and it is why the same file gets different answers at different doors.
If somebody has already turned you down, the letter is useful. It names which number you missed — the score, the ratio, a specific credit event, or something in the file that can be documented differently.
We will tell you honestly if it cannot be done. Sometimes it cannot, and that conversation ends with a plan to come back in six months rather than an application. But being told no by one lender is not the same as being told no by FHA.
And then there is the price
Qualifying is one question; what you are charged for it is another, and the second one is where most of the money is. Neither HUD nor the agencies add a credit-score surcharge to an FHA loan — so when a low score comes back with a high rate, it is worth knowing exactly who added what.
The consolation in the 10 percent
Ten percent down puts the loan at exactly 90 percent loan-to-value, which is the tier where FHA's annual mortgage insurance premium ends after 11 years rather than running for the full thirty.3
Nobody would choose a low score for that. But it means the honest comparison between a 575 file and a 585 file is not simply “$19,500 more at closing” on a $300,000 purchase — it is that, against nineteen years of premium the other borrower keeps paying. Ask for it both ways.
What to do with the next six months
If the file is close, six months of nothing going wrong moves it more than most people expect, and the gap between 575 and 580 is often one balance. That is worth pricing before you commit to the larger down payment — and it is a conversation, not an application.
Sources
These references support the factual explanations above. Where this page states a preference rather than a fact, it says so — those are our editorial judgement, not a claim that any one channel always costs less.
Next
Automated approval, manual underwritingA low score does not automatically mean manual underwriting. Plenty come back approved.Low score: FHA or VAOne program publishes score tiers. The other does not have any.Bring us the hard part
Whatever you have — a decline letter, a discharge order, a date you are not sure of. We will tell you honestly where you stand, including the version where the answer is to come back in six months. That conversation is free and it is not an application.