How much equity do I need?

A rate-and-term refinance can work with as little as 3-5% equity. Dropping PMI takes about 20%, and a conventional cash-out requires you to keep 20% (an 80% loan-to-value cap).

Will refinancing hurt my credit?

The hard inquiry causes a small, temporary dip. Rate-shopping multiple lenders within a ~45-day window counts as a single inquiry for scoring.

Refinance With a 500 Credit Score

Wondering about refinancing with a 500 credit score? Here is exactly how it works in 2026 — the rules lenders apply, the numbers, and your next move.

The short answer

A 500 credit score effectively rules out conventional and most cash-out refinancing in 2026, but an FHA rate-and-term refinance is possible down to 500 with a 90% maximum loan-to-value. If you already hold an FHA loan, an FHA Streamline is the better path because it typically skips the credit re-check and appraisal entirely. Expect manual underwriting and a higher rate than borrowers with stronger profiles.

What refinance lenders look for

Equity: ~3-5% for a rate-and-term, 20% to drop PMI, and 20% kept for a cash-out (80% LTV cap).
Credit: roughly 620+ for conventional; FHA and VA streamlines do not re-check your score.
Debt-to-income: generally under ~43-50% including the new payment.
Break-even: closing costs divided by monthly savings — refinance only if you will keep the home past it.

Refinance rates and guidelines change. Join the free Refi Rate Guide alerts to hear when the rules or rates that affect this situation move.

Your next steps

Pull your credit, estimate your home's value and current balance to gauge equity, and get quotes from two or three lenders the same day so the comparison is apples-to-apples. Then run the break-even before you commit.

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Frequently Asked Questions

Refinance With a 500 Credit Score — is it possible in 2026?: A 500 credit score effectively rules out conventional and most cash-out refinancing in 2026, but an FHA rate-and-term refinance is possible down to 500 with a 90% maximum loan-to-value. If you already hold an FHA loan, an FHA Streamline is the better path because it typically skips the credit re-check and appraisal entirely. Expect manual underwriting and a higher rate than borrowers with stronger profiles.
How much equity do I need?: A rate-and-term refinance can work with as little as 3-5% equity. Dropping PMI takes about 20%, and a conventional cash-out requires you to keep 20% (an 80% loan-to-value cap).
Will refinancing hurt my credit?: The hard inquiry causes a small, temporary dip. Rate-shopping multiple lenders within a ~45-day window counts as a single inquiry for scoring.