Can You Buy a Home with an FHA Loan if You Have Credit Problems?

If your credit history isn’t as strong as you’d like, an FHA loan could be the means to becoming a Utah homeowner.

Compared to other mortgage options, FHA loans are easier to qualify for, as they come with more lenient credit requirements. This is certainly understandable, as lenders know that if a borrower defaults, the Federal Housing Administration will pay them back.

However, not everyone who applies is approved for FHA financing. Borrowers must meet certain criteria to qualify, and the truth is, any of the following issues could keep you from achieving your dream of homeownership.

FHA loan Utah

No Credit History

Have a habit of paying for everything in cash? Insufficient credit activity could result in a loan denial. FHA lenders can review your rent and utility payment records, but you’ll need a solid track record to get approved for financing.

Late Payments

Haven’t always paid the bills on time? One or two late payments might not affect your ability to buy a home with an FHA loan, but as a general rule, lenders aren’t forgiving of a chronic history of delinquency.

Collections and Judgments

Do you have a collection or judgment on your credit report? If it isn’t paid in full and you haven’t had a payment arrangement in effect for at least a few months, it’s likely that your FHA loan application will be denied.


Have you filed for Chapter 7 bankruptcy? That could disqualify you for an FHA home loan, as your bankruptcy must have been discharged at least two years ago for you to be eligible for this form of financing.


Did you lose a Utah home to foreclosure? If this happened recently, don’t count on getting approved for an FHA loan – there’s a mandatory waiting period of three years after foreclosure before borrowers can apply.

What Can You Do if You Have Credit Issues?

If you’re interested in FHA financing and your credit history isn’t great, enrolling in a consumer credit counseling program is a smart step to take. Learn how to budget and manage your debts, and your issues will be regarded as water under the bridge.

In addition, before applying for an FHA loan, you’ll want to be in a good financial position for at least a year. Lenders will look at your credit report, and with twelve or more months of on-time bill payments, you’ll stand a stronger chance of getting an approval.

Do you have questions about FHA financing? Intercap Lending, a trusted leader in the northern Utah mortgage industry, is ready to provide you with expert answers and targeted advice. For a free consultation to discuss FHA loans and other mortgage solutions, contact our office in Orem, Utah, today.