Buying a home in Utah with a sub-600 credit score is tough, but it isn’t out of reach. Salt Lake City’s median sale price hovered near $549,000 in mid-2024, and 30-year fixed rates still sit above 6 percent, yet approvals cross the finish line every day. The good news is that Utah mortgage lenders for bad credit specialize in helping buyers overcome financial challenges. Tap trusted providers — including mortgage broker ClearPath Utah Mortgage — Utah’s $20,000 First-Time Homebuyer Assistance Loan, and a couple of fast credit tweaks to turn a ‘no’ into a confident ‘yes’. This 2026 guide defines “bad credit,” spotlights four lenders that welcome it, and hands you quick wins to cut costs and close with confidence.
Understanding bad credit and your loan options
Credit scores run from 300 to 850. Experian labels them 300–579 “poor,” 580–669 “fair,” and 670–739 “good.” Those bands matter because most mortgage programs draw a hard line at specific scores.
- Conventional loans: require a FICO of 620 or higher; drop below that and most banks decline.
- FHA loans: allow 580 or higher with 3.5 percent down or 500–579 with 10 percent down.
- VA loans: the Department of Veterans Affairs sets no official minimum, yet most lenders look for about 620.
- USDA loans: technically have no minimum, but scores of 640 or higher unlock streamlined approval.
Because the government backs FHA, VA, and USDA loans, the agency absorbs more risk, so approvals often come easier; borrowers pay for that protection through upfront and annual mortgage-insurance premiums or slightly higher interest rates.
Bottom line: match your current FICO to the loan program built for it, then tackle quick wins such as paying down credit-card balances or correcting report errors to climb into the next, cheaper tier. The next section shows how Utah incentives shorten that climb.
Utah’s 2026 mortgage climate
Utah home prices keep climbing, even after two years of high borrowing costs. In the Salt Lake City metro, the median sale price reached $524,990 in December 2024, about eight percent higher than a year earlier.
Mortgage rates have eased from their 2023 peak but remain stubbornly high. Economists expect the 30-year fixed to sit between 6.6 and 7 percent for much of 2026, according to the Associated Press. Borrowers with credit scores below roughly 640 often pay a full percentage point more because lenders add risk premiums.
According to Fannie Mae, its Desktop Underwriter now includes twelve months of on-time rent payments, improving loan recommendations on more than 10,500 applications as of April 2025. If your credit file is thin, this single data stream can push you into approval territory.
Closer to home, the Utah First-Time Homebuyer Assistance Program still offers up to $20,000 for a down payment, closing costs, or a permanent rate buydown, according to the Utah Senate. Pair that zero-interest loan with FHA or VA financing, and you can blunt much of the rate penalty that comes with a lower score.
Price growth and elevated rates are real challenges, yet these policy tailwinds give low-credit buyers valuable leverage at the negotiation table with lenders.
Best Utah mortgage lenders for bad credit
1. Clear Path Utah: local broker with multi-lender reach
Clear Path Utah is a state-licensed mortgage broker, not a direct lender, so it can shop more than 200 wholesale partners to find the one that accepts your credit profile, according to the company’s website. The firm routinely places FHA loans for scores as low as 580 and will submit manual requests down to 500 with 10 percent down.
Why this helps you: when one lender’s algorithm says no, a broker can pivot to another in minutes instead of restarting your application. Clear Path layers Utah Housing Corp. down-payment assistance, VA eligibility, or credit-boost tips to raise approval odds within a few weeks.
Advisors know county tax quirks, wildfire-insurance add-ons, and the latest $20,000 first-time-buyer loan the state offers. That local fluency trims surprises and can save about $3,200 in average fees, a figure the company publishes on its site.
Bottom line: if your score sits in the 500s and you want one guide to canvass every lender willing to play ball, Clear Path Utah is a smart first call.
2. Guild Mortgage: FHA low-score specialist
- Minimum FICO: 540 with 10 percent down; 580 with 3.5 percent down, according to The Mortgage Reports.
- Signature programs:
- Zero-Down FHA – combines an FHA first mortgage with a second loan to cover the entire 3.5 percent down payment; requires a score of 600 or higher, according to Guild Mortgage.
- One-Percent-Down Advantage – Guild grants the other two percent and buys down your rate for the first year.
Guild feeds applications into more than 700 national and local assistance databases, including Utah’s $20,000 First-Time Homebuyer Assistance Loan, so you can layer programs instead of choosing only one.
Good fit for: borrowers with scores from 540 to 599 or limited cash who still want a mainstream FHA loan rather than a high-rate non-QM product.
3. Carrington Mortgage Services: credit-event champion
- Minimum FICO: 500 for FHA and VA loans; 550 for Flexible Advantage non-QM loans that allow bankruptcies or foreclosures as recent as zero to 24 months, according to NerdWallet.
Manual underwriting digs into income trends and explanation letters; bank-statement options help self-employed Utahns. Carrington is licensed in 49 states, including Utah, so you can pair its FHA approval with the state’s $20,000 assistance loan to trim cash due at closing.
Good fit for: buyers with recent bankruptcies, foreclosures, or FICOs between 500 and 559 who still have stable income and a 10 percent down payment. Carrington’s rates run higher because it absorbs more risk, yet the trade-off is simple: an approval now versus waiting 12 months to rebuild credit. You can refinance later when your score rebounds.
4. New American Funding: inclusive, education-first lender
- Minimum FICO: 580 for FHA, VA, and USDA; files below 580 may be considered with 10 percent down and compensating factors, according to Business Insider.
- Alternative-credit friendly: underwriters will use 12 months of on-time rent, phone, or utility payments for applicants who lack a traditional score.
- Stand-out product: I CAN Mortgage lets you pick any term from 8 to 30 years, tailoring the payment to your budget.
New American services loans in every state except Hawaii and New York, so Utah buyers can stack its FHA approval with the state’s $20,000 assistance loan to offset closing costs.
Good fit for: first-time or minority borrowers who want patient coaching, bilingual support, and multiple loan paths without leaving one lender. New American’s quoted rates may sit a bit above big-bank averages, but the trade-off is flexible underwriting and hands-on education that can turn a borderline file into a signed approval.
Smart moves to boost approval odds
- Nudge your score. Keeping revolving balances below 30 percent of credit limits can raise a FICO by 10 to 20 points in one billing cycle—enough to drop an FHA down payment from 10 percent to 3.5 percent, according to NerdWallet.
- Stack more cash. A down payment of at least 10 percent lowers risk for the lender and can override automated denials. Utah’s $20,000 First-Time Homebuyer Assistance Loan can supply the extra funds.
- Buy the rate down. One discount point, which equals one percent of the loan, typically trims the rate by 0.25 percentage point and can save about $50 per month on a $300,000 mortgage when rates exceed 6 percent, estimates NerdWallet.
- Add alternative data. Provide 12 months of on-time rent and utility statements; Guild Mortgage and New American Funding count these records, and Fannie Mae’s system now rewards positive rent history.
- Shop within 45 days. Multiple mortgage pulls inside this window register as one inquiry, so collect at least three quotes to compare pricing without denting your score, advises the Consumer Financial Protection Bureau.
Use these steps, plus the lender that fits your score band, and you can turn a low credit score into a Utah home key in 2026.
Conclusion
Rising prices and interest rates make Utah’s market competitive, yet buyers with credit scores below 600 still have paths to homeownership. Matching the right loan program to your score, leaning on state assistance, improving your credit in small but strategic ways, and partnering with lenders accustomed to low-score files can turn a challenging application into an accepted offer. With planning and persistence, you can secure the keys to a Utah home in 2026—even with bad credit— especially if you begin by improving your credit in small but strategic ways to qualify for a mortgage.
Frequently Asked Questions (FAQ)
What is considered a bad credit score for buying a home in Utah?
Any FICO score below 580 is generally labeled “poor.” FHA loans may approve down to 500 with a 10% down payment, but most lenders prefer 580 or higher.
Can I buy a house in Utah with a 500 credit score?
Yes, but only through FHA or VA loans and usually with a 10% down payment. Lenders like Carrington Mortgage or Clear Path Utah specialize in these approvals.
What programs can help first-time buyers with bad credit in Utah?
Utah’s First-Time Homebuyer Assistance Loan offers up to $20,000 for down payment, closing costs, or a rate buydown—usable with FHA, VA, or USDA loans.
How can I quickly raise my credit score before applying for a mortgage?
Pay down revolving credit, dispute errors, avoid new debt, and ensure on-time rent and utility payments are reported to bureaus. These can raise your FICO 10–40 points in a few months.
How much should I save for a down payment with bad credit?
Aim for 10% down if your score is under 580, or 3.5% if you qualify for an FHA loan above 580. Utah’s assistance program can help bridge the gap.
