Yeah, that mortgage insurance is the kicker with FHA. I’ve had a couple properties where the buyers went FHA at 580-ish, and it got them in the door, but man, the monthly payment with that insurance tacked on isn’t small. I get why folks do it—sometimes you just need to get in before prices go up again or rents get even crazier. But if you can swing waiting and bumping your score up, you’re right, it can save a ton over the long haul.
One thing I’ve noticed is some lenders are way stricter than others about what they’ll accept for a 580 score. Some want a bigger down payment or extra documentation. Had one deal almost fall apart because the underwriter suddenly wanted proof of every $100 transfer in the buyer’s account for the last three months... felt like overkill.
Curious if anyone here has actually stuck with FHA long-term, or does everyone end up refinancing out once their equity and credit improve? I always wonder if folks just live with that insurance or if it’s pretty much a given that you’ll refi as soon as you can.
Honestly, I think sticking with FHA long-term is usually a money drain. That mortgage insurance adds up fast, and unlike conventional loans, it doesn’t just drop off once you hit 20% equity unless you refinance. I’ve seen buyers hang onto it for years because they’re worried about rates or paperwork, but if you’ve got the equity and your score’s improved, it’s almost always worth refinancing out. The monthly savings can be pretty significant over time. Sometimes people just get busy and forget, but I’d say don’t get too comfortable with that extra payment hanging around.
Title: Can You Buy a Home with a 580 Credit Score?
“That mortgage insurance adds up fast, and unlike conventional loans, it doesn’t just drop off once you hit 20% equity unless you refinance.”
This is spot on. I’ve seen so many folks get into an FHA loan because it’s the only way in the door with a lower credit score, but then they just... stay there. I get why—refinancing can seem like a hassle, especially if you’re worried about rates going up or your job situation changing. But that mortgage insurance premium is like a leaky faucet; it never really stops unless you do something about it.
Here’s what I’m curious about: for people who started with a 580 score and got into an FHA loan, how long does it usually take before their score improves enough to refi into a conventional? Is it mostly about paying down debt, or does just making on-time mortgage payments help move the needle? I’ve seen some clients get a nice boost within a year or two, but others seem stuck for longer.
Also, do most people realize that FHA mortgage insurance isn’t just a one-time upfront thing? There’s that ongoing monthly piece that can add up to hundreds per month over the years. I wonder if lenders are always clear about that at closing, or if buyers just focus on the “low down payment” part and kind of tune out the rest.
I’m with you that refinancing out of FHA is usually the smart play once you’ve got the equity and your credit’s in better shape. But I do wonder—are there situations where it actually makes sense to stick with FHA? Maybe if someone’s only planning to stay in the house for another year or two, or if they’re worried about closing costs eating up their savings? Or is it almost always better to make the jump as soon as possible?
Curious if anyone’s actually run the numbers both ways. Sometimes the math surprises you... but yeah, that mortgage insurance is a sneaky expense if you’re not paying attention.
Honestly, I had no clue about the ongoing FHA mortgage insurance until my first payment showed up and I was like, “Wait, what’s this extra $200?” It’s definitely not just a one-and-done fee. I’ve been chipping away at my credit score by paying down some old cards and just making sure nothing’s late, and it’s slowly moving up, but not as fast as I hoped. I ran the numbers once and, for me, refinancing would’ve wiped out my emergency fund with closing costs, so I’m still hanging out in FHA land for now. Maybe not ideal, but sometimes you gotta pick your battles...
That first mortgage payment is a real “welcome to adulthood” moment, right? I remember thinking I’d done all the math, and then—bam—FHA mortgage insurance hits like a surprise subscription you can’t cancel. I was in the same boat with my credit score hovering just above 600 when I bought. The FHA route was basically my only option unless I wanted to wait another year or two.
I did end up refinancing after about three years, but honestly, it was a whole saga. My credit had improved, but the closing costs were no joke. I had to do some serious spreadsheet gymnastics to make sure I wasn’t draining my rainy day fund. In hindsight, it worked out for me because my new payment dropped enough to make up for the upfront hit over time... but it’s definitely not a one-size-fits-all thing.
If you’re stuck in FHA land for now, you’re not alone. Sometimes it’s just about surviving those early years and letting your credit heal at its own pace. The insurance stings, but hey, at least you’re building equity instead of paying rent, right?
