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What Are My Mortgage Options with Bad Credit?

Disclaimer: Scott Buehler and Guild Mortgage do not provide credit repair services. The below information is provided for general knowledge only. Please consult with a credit repair specialist before making decisions that will impact your credit.

Bad credit can happen to anyone. All it takes to damage your credit score is a few missed bill payments, some maxed out credit cards or even life circumstances. From identity fraud, relationship separation or high medical bills beyond your control, I do understand the frustrations involved.

Ultimately, to begin a mortgage loan application with me as your lender, I will need you to have your middle score of all three bureaus to be at or above 580. There’s significantly more hurdles to qualify which may need more down payment, significant cash reserves and more to qualify. Interest rates on a FICO between 580-619 would likely be significantly higher as well.

With a FICO of 620 or greater, I’d recommend a FHA government secured mortgage. FHA is designed for borrowers with qualifications that don’t meet the standards of conventional loans. The downside is that FHA loans can be significantly more expensive with the required 1.75% Up-Front Mortgage Insurance Premium (UPMIP). FHA loans can be great resources for people who otherwise wouldn’t be able to qualify.

The standard FHA mortgage program requires a minimum 96.5% loan to value on your loan, however, there are a few Utah Housing FHA loan programs that are available for various FICO credit score levels. These programs offer 100% financing and help with loan costs when needed. Check out my Utah down payment assistance programs list or my California down payment assistance programs list depending on where you are buying.

If you have cash reserves available, the straight FHA loan program is likely your best option because the fees and mortgage payment would most likely be lower than Utah Housing.

Please send me a text to 435-590-1019. If I’m unable to find a loan program for you, I do have multiple options available for credit counseling assistance available upon request.