@Ginryuu hi!
Good question, and the answer is more encouraging than you might expect.
First, let's make sure we're talking about the same thing, because "500 calorie deficit" trips a lot of people up. A deficit is measured against your maintenance calories - what your body burns in a day. For your stats, maintenance is roughly 2,000-2,200 calories, so a 500 calorie deficit means eating around 1,500-1,700 calories a day. If you're eating much less than that, you've gone way past a 500 deficit and you need to eat more. The rest of this answer assumes you're eating around 1,600 a day.
Now, to your actual question: can you lose fat and build muscle at the same time on that deficit?
Think of building muscle like building a house. You need two things: building materials (protein) and workers to do the building (energy from food). If you don't have enough of either, nothing gets built. Worse, your body will start dismantling the house you already have - muscle is expensive to maintain, so it's the first thing your body sacrifices when resources run short. That's why muscle is so easy to lose and so slow to build, especially for women.
Normally, eating in a deficit means fewer workers on site, so people assume nothing can be built. But here's what makes your situation different: you have energy stored on site already. At a higher body fat percentage, your body can pull from those reserves to power the construction, as long as you keep the building materials coming in. And as a complete beginner, your muscles respond to training more readily than they ever will again. This is genuinely the best window of your training life for losing fat and building muscle at the same time.
So yes, a 500 calorie deficit can work for you, on three conditions:
1) Protein every day, no exceptions. Aim for around 100-120g. This is your building material - without it, the deficit will eat your muscle along with your fat.
2) Resistance training 3-4 times a week, which you're already doing. This is the work order that tells your body "we're keeping this muscle, take the energy from fat instead."
3) Walk a lot. Walking is the most underrated fat loss tool there is - it burns fat, preserves muscle, and doesn't dig into your recovery. Aim for 45-60 minutes a day.
A word of caution: don't cut deeper than 500. Below that, you'll feel it fast - weak workouts, constant tiredness, and your body will quietly sabotage you by making you fidget less and move less all day without you noticing. That "background movement" is a big chunk of what you burn daily, and your body will shut it down to survive. A moderate deficit you can sustain for 8 months beats an aggressive one you abandon in 3 weeks.
Your goals - 40 pounds down, 2-4 pounds of muscle up, 8 months - are ambitious but doable. In fact, a 500 deficit works out to about a pound of fat loss per week, which lands you almost exactly on your 8 month target. Eat your protein, lift, walk, be patient.
I hope this helps!
You've got this
