How to Get a First-Time Buyer Mortgage with Bad Credit

Bad credit doesn’t automatically prevent you from getting on the property ladder. Many first-time buyers secure mortgages even with past financial issues, provided they can show stable recent behaviour, strong affordability and a clear understanding of lender expectations.

This guide explains how to get a first-time buyer mortgage with bad credit, what lenders check, and practical steps to help prepare your application. This article provides general information only and does not offer regulated mortgage advice.

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What Counts as “Bad Credit” for First-Time Buyers?

Lenders assess your full credit history — not just a score — and different types of adverse credit carry different weights.

Common examples include:

• Late or missed payments
• Defaults
• County Court Judgments (CCJs)
• High credit utilisation
• Payday loans (historic or recent)
• Persistent overdraft use
• Debt Management Plans (DMPs)
• Debt Relief Order (DRO) or bankruptcy (historic)

Not all adverse credit is viewed the same. A single missed payment is very different to a recent CCJ.

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Can You Get a Mortgage as a First-Time Buyer with Bad Credit?

Yes — but your choice of lenders may depend on:

• The type of adverse credit
• How recent it is
• Whether debts are settled
• Deposit size
• Income stability
• Bank statement conduct
• Affordability

Many first-time buyers with credit issues start with specialist lenders who use manual underwriting before later remortgaging to mainstream lenders as their credit improves.

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How Lenders Assess First-Time Buyers with Bad Credit

1. Recency of Adverse Credit

This is one of the most important factors.

• 0–12 months: most restrictive
• 1–3 years: more lenders available
• 3–6 years: issues carry less weight
• 6+ years: adverse markers drop off your file

Lenders focus heavily on your most recent 6–12 months.

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2. Type and Severity of Issues

Some issues reduce options more than others:

• Serious: CCJs, insolvency, repossession
• Moderate: defaults, missed payments, DMPs
• Mild: high utilisation, frequent soft searches

The more serious the issue, the more deposit and stability lenders usually require.

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3. Deposit Size

Deposit can offset risk. General patterns include:

• 5% deposit: possible only with mild or older adverse
• 10% deposit: realistic for moderate adverse
• 15–25% deposit: wider options with more serious or recent issues

A larger deposit improves rates and lender choice.

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4. Bank Statement Conduct

Underwriters assess:

• Overdraft use
• Returned payments
• Gambling activity
• Spending habits
• Incoming vs outgoing patterns

Good bank behaviour can outweigh older credit issues.

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5. Affordability and Income

Stable employment and predictable income streams strengthen your application, especially if credit concerns remain.

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Typical Bad Credit Scenarios for First-Time Buyers

Scenario 1: Missed mobile phone payments in the last 12 months

Some lenders will still consider you if everything else is strong.

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Scenario 2: Defaults from 2–4 years ago, now settled

Often acceptable with a 10–15% deposit.

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Scenario 3: A CCJ more than 3 years old

Specialist lenders may accept depending on deposit size and conduct since.

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Scenario 4: High credit card utilisation

Reducing balances before applying can improve lender choice.

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Scenario 5: Payday loans from several years ago

Older payday loans are increasingly accepted by some lenders if recent conduct is clean.

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Scenario 6: Historic DMP or DRO

More options appear once at least 12–24 months of stability can be demonstrated.

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Steps to Improve Your Chances of Getting a First-Time Buyer Mortgage with Bad Credit

(General Information Only)

1. Check All Three Credit Files

Look for:

• Incorrect accounts
• Duplicate defaults
• Wrong addresses
• Old adverse still showing as open
• Missed payments marked incorrectly

Fixing errors makes a significant difference.

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2. Build 6–12 Months of Clean Financial Conduct

Lenders prioritise:

• No overdraft reliance
• No missed payments
• Predictable spending
• Reduced debt balances

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3. Reduce Credit Utilisation

Where possible:

• Keep balances below 30%
• Avoid maxing out cards
• Aim to reduce reliance on credit

This helps improve internal lender scoring even before the score itself updates.

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4. Avoid New Credit Before Applying

New credit reduces affordability and can trigger lender caution.

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5. Strengthen Your Deposit

More deposit = lower lender risk.

Even an extra 5% can widen options considerably.

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6. Prepare Documentation Early

You may need:

• 3–6 months of bank statements
• Payslips and P60
• Deposit evidence
• ID and address history
• Explanation of past credit issues

A well-prepared pack helps underwriters assess your case quickly.

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7. Keep Spending Predictable

Limit:

• Large, unexplained transactions
• Irregular spending
• High takeaways or gambling activity

Lenders want to see consistency and control.

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8. Add Stability Wherever Possible

Examples:

• Stay at the same address until application
• Avoid job changes right before applying (where possible)
• Maintain direct debits for bills

Small changes can make your profile appear more reliable.

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What Lenders Look for in a First-Time Buyer with Bad Credit

• Evidence of recovery
• Stability in income and employment
• A reasonable deposit
• Strong recent financial behaviour
• Clear explanation of past issues
• Confidence that issues won’t repeat

Lenders want to understand the story behind your credit file, not just the numbers.

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Summary

Getting a first-time buyer mortgage with bad credit is entirely possible. Your options depend on:

• How recent and serious the adverse credit is
• Whether debts are settled
• How strong your recent conduct is
• Your deposit size
• Your income and affordability

Many first-time buyers with credit challenges secure mortgages through specialist lenders before transitioning to mainstream lenders later.

This article provides general information only. For personalised guidance, regulated mortgage advice is required.