Answer: -You can get a loan with a hefty down payment however it is in your best interest to improve your credit report prior to getting a new mortgage. The costs to you will heavily outweigh the benefits because your interest rates would be ugly. Why buy a home if you can't enjoy the benefits of it as an asset.I work as a mortgage broker and I refer clients of mine to a company called Veracity. There's a lot of hearsay about credit management companies and a lot of them are horrible yet I assure you this one is legitimate and highly recommended; they dispute any and all errors/problems on your credit report on your behalf.It will take time to report to the bureaus (4-8 weeks to be completely safe) although be sure your debt is recent or it may damage your credit report to pay it now.The reason being is that when you pay a collection or bad debt you actually bring your FICO down because it shows on your report as being last reported NOW rather than whenever it occurred. Consult with a knowledgeable proffessional, myself, Veracity or all three and discover your options are better than you think. -It does not matter how much you pay down for your new home. It all comes down to the FICO score.So what I suggest you do is before buying a home and paying a high interest on the mortgage, you increase your credit score.In order to do so you should pay all of your credit card debt but do not Close the accounts on your credit card becuase that will not help to increase your score.Put purchases on the credit card that you will KNOW that you will pay off when the bill comes. For example charge only $20 every month on the credit card so you can show the companies that you are responsible.Check your credit score every 3-4 months.Once your FICO scores go up to around 700's then apply for a mortgage.Til then it is better to go on a rental.