FHA Minimum Decision Credit Score Explained: The 500, 580, and 90% LTV Tiers

Skip the 620 Rumor

Everyone says you need a 620 score to buy a house. If you're reading a site dedicated to FHA loans, you already suspect that number is off, and you're right. There is no 620 line in FHA guidelines. The actual structure runs on something called the Minimum Decision Credit Score, or MDCS, and it splits into tiers most buyers never hear about until someone tells them no.

The Verbatim Guideline

Straight from HUD 4000.1:

"The Borrower's Minimum Decision Credit Score determines the maximum LTV available. If the Borrower's MDCS is at or above 580, the Borrower is eligible for maximum financing (96.5% LTV). If the MDCS is between 500 and 579, the Borrower is limited to a maximum LTV of 90 percent. Borrowers with non-traditional or insufficient credit histories are eligible for maximum financing but must be underwritten using manual underwriting procedures."

Three outcomes, not one pass-fail line:

1. MDCS 580 or above: 96.5% LTV, 3.5% down. 2. MDCS 500 to 579: 90% LTV, larger down payment required. 3. Non-traditional or insufficient credit history: still eligible for maximum financing, routed through manual underwriting.

Where Juliana's Story Fits

A situation that comes up often on the credit-challenged side of FHA lending looks like this: a first-time buyer near Bonneau, SC, we'll call her Juliana, has a score in the low 500s and gets flatly told by a lender that she doesn't qualify. Under the actual guideline, a 500 to 579 MDCS doesn't disqualify anyone. It places the borrower at a 90 percent LTV cap instead of 96.5 percent. That's a different down payment requirement, not a denial.

The confusion usually traces back to lender overlays, which sit on top of FHA's published floor. A lender can choose to require a higher score than FHA does. That's a business decision, not a guideline requirement, and buyers rarely get told which one they're facing.

Manual Underwriting: The Third Path

The part of this guideline buyers overlook most is the manual underwriting provision. Borrowers with non-traditional or insufficient credit histories, meaning not much of a credit file to score at all, aren't automatically pushed to the 90% tier. They can still be underwritten manually toward maximum financing. This matters for buyers who've paid rent and utilities reliably but never built a traditional tradeline history.

The Exact Question to Ask

Before accepting any answer about qualification, ask directly: "Can you tell me my Minimum Decision Credit Score and which FHA LTV tier that places me in, 96.5%, 90%, or does it require manual underwriting?"

That question forces a lender to name a specific tier tied to your actual file, rather than a general statement about whether you qualify.

Talk to a Broker Who Names the Tier

I'm Jason Sharon, licensed mortgage broker at Home Loans Inc. My approach is to identify the MDCS and the applicable tier before making any statement about qualification. If a previous lender gave you a flat no, call 843-LOW-RATE and let's find out which tier your actual file falls into.

Home Loans Inc - Jason Sharon, Mortgage Broker. Company NMLS #1728740, Jason Sharon NMLS #1281448. Equal Housing Opportunity.