Also, pull your own credit report for free, and use your own information as a reference. Prices won't be skyrocketing anytime soon, there'll always be competition for first time buyers, so improve your credit and you'll get a better rate, which will help you qualify for more.
You're already on you way with such a good down payment! Very few of my FHA buyers have that much. You'll be in a very strong position when you begin to submit offers.
Good luck to you!
I would put that $40K in a safe place and work on getting your credit restored. Any financing on a loan of this nature is going to be hard to obtain and expensive. Most hard money lenders will not lend on a property that is intended as a primary home.
If you need a referral for credit repair, let me know. I also hate seeing anyone take all the cash they have and tie it up in a single, illiquid asset.
Good luck and let me know if I can help.
Email me . . . I might be able to find you affordable financing. This is no guarantee but it is possible and the rates/terms are not ridiculous nor a scam. You will need to show proof of income and other assets aside from the 40K.
I study credit reports full time and helping people such as yourself recover is my niche. Beware of "credit repair" company's. Getting something deleted doesn't mean your score will go up.
Because of the bad credit no institutional lender will finace you.
It looks like you might only be able to go with a hard money lender but I'm not sure if they'll lend such a small amount. An alternative would be seeing if the seller is willing to carry the balance, meaning you would make payments directly to him at a set interest rate you both have agreed on.
Well, let me know if I can help you out in any other way.
Daniel Di Matteo
CENTURY 21 Award
If your credit won't get you a loan from a bank, you might try hard money lenders. They charge high interest and fees but probably can get you the money. The hard money lenders will take the home away if you don't keep up on payments and they also usually have a balloon payment that means the entire loan will be due in 3 to 5 years. Maybe over that period of time you can get your credit back and refinance out of the hard money loan.
You also might see if the seller will carry a note back on the property. It is hard to find banks that do small loans.