For borrowers with a 580 Credit Score, obtaining a home equity loan is possible, but lending standards and rates can differ significantly compared to prime applicants. This page reviews what to expect with a 580 credit score—minimum requirements, interest rates, key factors, and how this impacts your options for home equity lending.
Who This Loan Is For
Homeowners who wish to borrow against their home’s equity for uses such as debt consolidation, major expenses, or home improvement projects.
Applicants with fair credit, specifically those with FICO scores around 580, who may not qualify for the lowest rates but have sufficient equity and verifiable income.
Borrowers comfortable using their home as collateral.
Key Facts (At-a-Glance)
Item
Details
Loan Type
Home equity loan (lump sum); also known as second mortgage.
Purpose
Debt consolidation, home repairs, large medical expenses, education costs, or major purchases.
Amount Range
Typically $10,000 – $500,000 (sample/illustrative), depending on home value, equity, and lender.
Term Length
5–30 years are common; individual lender policies apply.
APR
Rates as of August 2025 averaged 8.23% nationally; rates for 580 credit often higher (source: Bankrate). Actual APR varies by credit, equity, and lender.
Origination fees, appraisal, title, and possible closing costs; on average 2–5% of the loan amount (sample/illustrative).
Collateral
Secured by your home; risk of foreclosure if payments are missed.
Eligibility
Minimum credit score often starts at 580–620, with strict loan-to-value (LTV) and debt-to-income (DTI) requirements. Proof of income required.
Funding Speed
Commonly two to six weeks, depending on appraisal and documentation speed.
Payment Frequency
Monthly; standard with most home equity loans.
Pros
Possible to access significant loan amounts using home equity, even with a 580 credit score for qualified borrowers.
Fixed APR and monthly payment structure provide predictability for budgeting.
Interest rates typically lower than unsecured personal loans or credit cards, especially for large amounts.
Funds can be used flexibly for major expenses or paying down high-interest debt.
Potential for longer repayment terms than unsecured consumer loans.
Cons
Rates for borrowers with a 580 credit score are usually much higher than for those with good/excellent credit.
Upfront fees (origination, appraisal, title, closing) can add significant cost, especially at higher LTVs.
Using your home as collateral introduces risk of foreclosure if payments are missed or DTI increases.
Process generally slower and more document-intensive than personal or unsecured loans.
May require significant home equity and low LTV; not all lenders will consider applicants with fair credit.
Costs, Interest & Total Repayment
APR represents the all-in cost, including interest and required fees; APR may be substantially higher for fair credit borrowers (580–669 range) than headline averages.
Origination and other upfront fees are added to the initial loan balance or paid at closing, increasing total cost.
Monthly payments include both principal and interest (amortization), making amounts predictable if fixed-rate.
Late payments typically incur penalty charges and are reported to credit bureaus, affecting your score further.
See the following table for a sample/illustrative amortization scenario:
Example
Amount
APR
Term
Monthly Payment
Total Paid
Sample Scenario
$50,000
9.5% (sample/illustrative for 580 credit)
10 years
$648
$77,760
Eligibility, Underwriting & What Lenders Evaluate
Lenders consider credit score (minimum often 580–620), loan-to-value ratio (commonly capped at 80–85%), and debt-to-income (DTI) ratio (usually under 43–50%).
Proof of stable income and employment is required for underwriting, along with home appraisal to determine property value.
Soft credit checks (“pre-qualification”) estimate odds without affecting your score; full applications trigger a hard credit inquiry.
Exact criteria vary; always verify with the official lender, as some may have stricter cutoffs or local requirements.
Application Steps
Assess offers or pre-qualify online or in-person; prepare property details, proof of income, tax returns, and ID.
Submit official application; lender orders credit check, home appraisal, and reviews DTI/credit history.
Upon conditional approval, review and accept loan terms, pay any upfront fees, and complete final documentation.
Loan funds are disbursed after closing, typically to your bank account (timelines typically 2–6 weeks).
Risk Factors & Responsible Borrowing
Defaulting on a home equity loan can lead to foreclosure, as your home is collateral.
Borrowing near the maximum available equity can leave you exposed if home values fall.
Fair credit scores (580) may be further affected by hard inquiries or missed payments; rates and offers may be less favorable than for higher credit bands.
Alternatives & Comparisons
Notable Alternatives
Personal loans (unsecured; generally higher rates but no risk to your home, may require higher scores for large amounts).
HELOCs (home equity line of credit; more flexible, but often variable rate and different eligibility criteria).
Cash-out mortgage refinance (replaces current mortgage with a larger loan, redisbursing the difference in cash).
0% introductory APR balance transfer cards (for limited amounts, typically up to $10,000–$15,000, credit score dependent).
Credit union products (may offer niche programs for fair/poor credit, often at lower rates than banks).
Side-by-Side Comparison
Feature
Home Equity Loan (580 score)
Personal Loan
HELOC
APR
8.23%+ (higher for 580 credit)
10–36% (sample/illustrative)
Varies, often variable (sample/illustrative start 9–12%)
Fees
2–5% of loan amount
Generally 0–8% origination
Possible annual and draw fees
Term
5–30 years
1–7 years
Draw plus repayment period, e.g., 10+10 years
Collateral
Yes (your home)
No
Yes (your home)
How to Reduce Costs
Compare official lender rates and fee disclosures; not all providers accept 580 credit, and those that do may have varying offers.
Avoid unnecessary add-on products that can increase your total costs at closing.
Consider shorter repayment terms if affordable, as these typically reduce total interest paid.
Check for autopay discounts and fee schedules directly with the lender.
Check if prepayment penalties or early payoff fees apply; terms are detailed in official loan documents.
Frequently Asked Questions
Can I get a home equity loan with a 580 credit score?
Some lenders will consider applicants with a 580 FICO score, though higher equity and stricter DTI caps may apply.
Rates and fees are generally higher; eligibility varies by state and lender.
What interest rate should I expect for a 580 credit score?
As of August 2025, average national home equity loan rates were 8.23%, but borrowers with 580 credit often face higher rates (sample: 9.5–12% or more).
Confirm current rates with each provider; market rates change frequently.
How much equity do I need with a 580 credit score?
Most lenders require at least 15–20% equity in your home, and may limit loan-to-value (LTV) to 80% or less.
Some may require more equity for fair-credit applicants compared to prime borrowers.
Conclusion & Next Steps
A home equity loan with a 580 credit score is possible, but expect higher APRs, stricter eligibility checks, and increased risk to your home if you miss payments.
Review current official rates, compare total costs, and ask each lender about unique requirements for fair credit borrowers.
If considering alternatives, research unsecured loans and HELOCs to find the best fit.
