590 Credit Score Home Loan

590 Credit Score home loan


Securing a home loan with a 590 credit score is not impossible. The main obstacle will often be the higher interest rates and less favorable loan terms, as lenders view this credit score range as “poor”, thus carrying more risk.

While traditional lenders may have strict requirements, there are specialized non-prime lenders who may be able to offer home loans to individuals with a credit score of 590. These lenders consider factors beyond just credit scores, so it’s important to explore all available options and consult with financial experts to find the best solution for your specific situation

We have helped thousands of home buyers to qualify for a mortgage with credit scores even lower than 590. Let us help you or answer some of your questions even if you are not ready to finance a home yet. We can provide you with some answers without pulling your credit. Contact us here and one of our loan officers will get back to you.

Can You Get a Mortgage with a 590 Credit Score?

Many prospective home buyers assume that your credit must be in the 600s or 700s to get a mortgage.  This is certainly not the case, as many mortgage lenders offer home loans to borrowers with credit scores as low as a 590 or even below.

From a lender’s perspective, a lower credit score indicates a higher likelihood of default on the loan. To mitigate this risk, they may require larger down payments or charge higher interest rates to protect themselves.

Thoroughly assessing your financial situation and demonstrating responsible financial behavior—such as stable employment history and consistent income—can positively influence your eligibility for a home loan despite the challenges posed by your credit score.

Let’s take a closer look at some of the home loan types that may be within reach for individuals with this credit score.

FHA Loan with 590 Credit Score

The most common type of loan available to borrowers with a 590 credit score is an FHA loan. An FHA loan is backed by the Federal Housing Administration and is known for being more flexible in terms of credit score requirements.

FHA loans only require that you have a 500 credit score, so with a 590 FICO, you will definitely meet the credit score requirements.  One of the key advantages of an FHA loan is the ability to make a down payment as low as 3.5%. This can be particularly beneficial for those who have been struggling to save up a larger down payment.

Other FHA loan requirements are that you have at least 2 years of employment, which you will be required to provide 2 years of tax returns, and your 2 most recent pay stubs.  The maximum debt-to-income ratio is 43% (unless you have satisfactory “compensating factors”, such as a higher down payment, or cash reserves).

Something that attracts many borrowers to FHA loans is that the minimum down payment requirement is only 3.5%.  This money can also be borrowed, gifted, or provided through a down payment assistance program.

Would you like to see if you qualify for an FHA loan?  We can help match you to get pre-qualified.

Click here to speak with a loan officer

USDA Loan with 590 Credit Score

For individuals considering purchasing homes in rural areas, the U.S. Department of Agriculture (USDA) offers USDA loans. These loans often come with competitive interest rates and do not require a down payment. For those with a credit score of 590, this option can be particularly attractive. It’s worth mentioning that USDA loans have specific eligibility requirements related to location and income, so it’s important to confirm eligibility before pursuing this type of loan.

There is no minimum credit score requirement for a USDA loan. However, most lenders have their own credit score minimum for a USDA loan.  Fortunately, you can still get approved for a USDA loan with a 590 credit score, but it will require a manual approval by an underwriter.  In order to get approved with a 590 credit score, expect to have strong “compensating factors”, such as conservative use of credit, 2 months mortgage payments in cash reserves (savings), a low debt-to-income ratio, and/or long job history.

Other requirements for USDA loans are that you purchase a property in an eligible area.  USDA loans are only available in rural areas, which includes the outer areas of major cities.  You can not get a USDA loan in cities or larger towns (with a population over 30,000 people).

You also will need to show 2 years of consistent employment, and provide the necessary income documentation (2 years tax returns, and 2 recent pay stubs).

Tip: Researching eligible areas and consulting with lenders familiar with USDA loans can provide valuable insights and guidance throughout the application process.

Click here to find out if you qualify for a USDA loan

VA Loans

VA loans are designed to assist eligible service members, veterans, and their spouses in achieving homeownership. These loans often offer competitive interest rates and typically do not require a minimum credit score, making them accessible to individuals with a 590 credit score. The absence of a minimum credit score requirement makes VA loans an appealing option for those working on improving their credit while aspiring to become homeowners.

We frequently close VA loans for veterans who have scores much lower than 590. Feel comfortable contacting us here to have an initial discussion or to get pre-qualified.

Each of these home loan options presents unique advantages tailored to specific circumstances and goals. By exploring these possibilities, individuals can assemble a clearer understanding of which path best aligns with their homeownership aspirations. Remember to carefully consider factors such as future financial outlook and long-term housing needs when evaluating these options.

With a deeper comprehension of the various home loan options available, it’s time to shift focus towards unraveling the intricacies of getting approved for multiple types of loans with a 590 credit score.

Getting Approved for various Loans with a 590 Credit Score

Securing a mortgage with a 590 credit score may require extra considerations and documentation. We will assess more than just your credit score in the loan application process.

Income: Your income plays a pivotal role when we review your loan application. We will seek assurance that you have a stable source of income to meet monthly mortgage payments on time. A steady job or reliable income from other sources can work in your favor despite the lower credit score.

Employment History: Lenders also evaluate your employment history. A consistent work history, especially if you’ve been with the same employer for a substantial period, demonstrates stability and reliability. This factor can reassure lenders, counterbalancing the impact of a lower credit score.

Debt-to-Income Ratio: Your debt-to-income ratio (the percentage of your gross monthly income allocated to paying debts) is a part of the loan approval process. Lenders want to see that you have enough income to comfortably meet current debt obligations and the new mortgage payment. Maintaining a low debt-to-income ratio can strengthen your position, even with a 590 credit score.

Stability of Financial Situation: In addition to income, employment history, and debt-to-income ratio, our underwriters consider the overall stability of your financial situation. Factors such as savings and assets are a factor too. A healthy savings account or valuable assets could alleviate concerns about credit score, showcasing financial stability and responsibility.

It’s clear that while obtaining a home loan with a 590 credit score presents challenges, other aspects of your financial profile carry weight in the approval process. Your ability to demonstrate stability and reliability in managing your finances can significantly influence the lender’s decision-making process.

Frequently Asked Questions

Can I get a conventional loan with a 590 credit score?
The minimum credit score required to get a conventional loan is 620.  Therefore, you would need to wait until your credit score has increased by at least 28 points before you would be eligible for a conventional loan.

Can I get a VA loan with a 590 credit score?
If you are eligible for a VA loan (which are exclusively for veterans), you may be able to qualify with a 590 credit score.

What if I have had a major credit issue in recent years?
If you have had a bankruptcy, foreclosure, or short sale, we can offer loans to borrowers even just 1 day after such events.

What do non-prime loans offer?
Non-prime loans provide an opportunity to get a mortgage for borrowers that do not qualify for conventional and FHA loans.  They have much less strict credit requirements, including no waiting periods after bankruptcies, foreclosures, and short sales.  Non-prime loans also are available to borrowers with credit scores as low as 500.

Are there other credit requirements that I should know about?
We typically require that you have 3 trade-lines on your credit report. This can be auto loans, credit cards, personal loans, or other qualifying lines of credit. There can be exceptions to this rule, including alternative bills that are often allowed (phone bills, utilities, etc.).

What are the interest rates for a borrower with a 590 credit score?
The interest rate will depend on type of mortgage program, your individual qualifications, and the date you lock your interest rate. We can help connect you with a mortgage lender that offers free rate quotes.  To have a loan officer contact you, please fill out this form.

Is down payment assistance available to someone with a 590 credit score?
Yes, in fact many down payment assistance programs are available to borrowers with a 590 credit score.  The types of programs that exist include both local (city, county, or state level), and nationwide programs.  We can help you see if you qualify for down payment assistance.  If you have lower income, you are even more likely to qualify, as these programs are often intended for lower income households.