The 620 minimum was the bank's rule, not FHA's.
FHA's published floor is 580 with 3.5% down, and 500 to 579 with 10% down. Most people told they do not qualify were told that by one lender applying its own stricter rules on top.
Turned down somewhere else? That is the most useful call I take.
What an "overlay" is, in plain English
FHA sets the rules for who is eligible. Individual lenders are then free to be stricter than FHA, and most banks are. Those extra in-house rules are called overlays.
So when a bank with a 620 overlay looks at a 590 borrower, it declines the file. The borrower walks away believing they do not qualify for FHA. What actually happened is narrower: they do not qualify at that bank.
I am an independent broker, so I am not stuck with one company's overlay sheet. Finding the lender whose rules fit your situation is most of the job on a credit-challenged file, and it is the one thing a single bank cannot do for you.
What FHA actually allows
Program rules, not lender preferences.
580 with 3.5% down
That is FHA's published minimum credit score for the low down payment option. Not 620, not 640. If a lender quoted you a higher number, that was their policy talking, not FHA's rule.
500 to 579 with 10% down
FHA does not stop at 580. Scores in the 500s are eligible with a larger down payment. Fewer lenders will go there, which is exactly where shopping the market matters.
Gift funds are allowed
Your entire down payment can come from a family member as a documented gift. You do not have to have saved it yourself, which is how a lot of first purchases actually happen.
Higher debt ratios tolerated
FHA is generally more forgiving on debt-to-income than conventional financing, which matters if you carry a car payment or student loans.
Past credit events are not permanent
Bankruptcy, foreclosure, and short sales all have waiting periods, and they are shorter than most people assume. Time since the event matters more than the event itself.
Assumable down the road
FHA loans can generally be assumed by a qualified buyer. In a higher-rate market that can become a genuine selling feature when you go to sell.
How I work a tough file
Tell me what happened
If you have been declined, the reason matters. Credit score, debt ratio, and documentation problems all have different fixes, and some are not problems at all with the right lender.
I shop the overlays
Same file, many lenders, very different rules. This is the part a bank structurally cannot do for you, because a bank only has its own guidelines.
Get pre-approved and shop
You get a real pre-approval letter and a real price range, and I stay reachable through the search, the appraisal, and the closing table.
Common questions
So why did the bank tell me 620? +
Because it was their number, not FHA's. Lenders are allowed to impose stricter requirements than the agency program requires, and those extra rules are called overlays. A bank with a 620 overlay will decline a 590 borrower that FHA itself would allow. The borrower hears "you do not qualify for FHA," which is not what happened. What happened is they do not qualify at that lender.
How does using a broker change that? +
I am not tied to one lender's overlay sheet. I work with hundreds of lenders, and their FHA overlays differ widely. My job on a credit-challenged file is to find the ones whose rules match your actual situation, rather than making your situation fit one company's box.
What is mortgage insurance on FHA? +
FHA loans carry an upfront mortgage insurance premium, which is usually financed into the loan, plus an annual premium paid monthly. On most FHA loans today that annual premium stays for the life of the loan. That is the main tradeoff against conventional financing, and it is why I price both when your credit is strong enough to have the choice.
Is FHA only for first-time buyers? +
No, that is a common misconception. FHA is available to repeat buyers too, as long as the home will be your primary residence. It is popular with first-time buyers because of the low down payment, not because of a rule.
Will my offer be taken less seriously? +
Some sellers do prefer conventional offers, and it is fair to be aware of that. In practice a strong pre-approval, a solid earnest money deposit, and a realistic closing timeline matter far more than the loan type. I will make sure your pre-approval letter does the work it needs to do.
Who do I call with questions? +
Me, directly. Rich Preston at (448) 202-7711 or rich@prestonlending.com. If you have been turned down somewhere, tell me the stated reason and I can usually tell you in a few minutes whether it is a real blocker.
One no is not the answer.
Tell me what you were told and I will tell you honestly whether it is a real blocker or a wrong-lender problem.
FHA loans are insured by the Federal Housing Administration. Credit score minimums, down payment requirements, mortgage insurance premiums, and waiting periods after credit events are set by FHA and are subject to change. Individual lenders may apply stricter requirements. This page is for informational purposes and is not an offer or commitment to lend, and is not endorsed by or affiliated with FHA, HUD, or any government agency. All loans are subject to credit approval, income and asset verification, and property appraisal. Rich Preston, Branch Manager, NMLS 1735238. NEXA Lending, AZ Broker License 0944059, NMLS 1660690. Equal Housing Lender.