Think Your Credit Score Is Too Low To Buy A House? Maybe Not (Part 2 of 5)

FHA loans

The advantage to a Federal Housing Administration (FHA) loan for many buyers is the low down payment. You may need only 3.5% down to purchase a home with this type of loan, which is backed by the government. But, you'll need a minimum 580 credit score if you're only planning to put 3.5% down. Can't meet that benchmark? You'll need more cash up front.

"If your credit score is below 580, however, you aren't necessarily excluded from FHA loan eligibility," said the FHA. "Applicants with lower credit scores will have to put down a 10 percent down payment if they want to qualify for a loan."

For FHA loans, your credit score can be as low as 500. But, "Those with credit scores between 500 and 579 are limited to 90 percent LTV," which leaves a lot of people out of luck.