Mortgage Q&A: “What’s the easiest type of mortgage?”
Compared to other types of loans, mortgages can be difficult to get approved for.
Lastly, mortgage lenders typically require a tri-merge credit report, steady income and employment, and property in the bank.
They don’t just take your word for it like they might on a credit card application.
All of those items must be documented to ensure that you are a creditworthy borrower capable of financing a piece of real estate.
Easiest types of mortgages to get ranked
1. FHA loan (Minimum combination of credit score and down payment)
2. conforming loan (Low minimum down payment but needs 620 FICO)
3. VA loan (Zero down and no minutes. FICO but must be active duty/veteran)
4. usda loan (Zero down, no minimum. FICO but must be rural location and have income limits)
5. jumbo loan (Typically requires 10%+ down payment, 680+ FICO, and property deposit)
FHA loans are one of the easiest mortgages to get because of the 3.5% down payment and 580 minimum FICO score requirement.
Due to the high 620 minimum FICO score requirement, conforming loans rank second, despite the minimum 3% minimum down payment required.
USDA and VA loans both don’t require a down payment and technically don’t have a minimum FICO requirement, but are more specialized products. It’s not that simple.
Jumbo loans are usually the most difficult to obtain because they are large (loan amount) and are not backed by Fannie/Freddie or the government.
tip: If you already have a mortgage, a structured refinancing It may be even easier to qualify for.
The answer depends on what your problem may be
Before we get down to the specifics, I should note that there is no universal answer to this question.
It depends on what might be the difficulty in getting a home loan in the beginning.
Is your credit score not so great? Is your income limited? Don’t have money in the bank? Or maybe a combination of all these items?
The very first thing you should do is a self-assessment. Take a look at your income (and employment history), your credit report (and score), and your assets.
would you lend yourself a mortgage, The funny thing is that even if you don’t, there probably is a lender who will!
Jokes aside, take the time to see where you stand Before You Apply for a Mortgage,
Easy Street is not necessarily the best way when it comes to home loan financing.
Now let us discuss the details based on some general issues.
If you are short of down payment for the mortgage
If down payment funds are your problem, there are many zero down home loan option out there.
The two most common are VA loans and USDA loans. However, these are reserved for military/veterans and those shopping in rural areas, respectively.
Assuming you are either of the two, the down payment is no longer a constraint. They allow 100% financing.
Even if you don’t qualify for those types of loans, there are credit unions that offer zero down mortgages.
and several state housing finance agencies that provide grants and down payment assistance.
Some private lenders also offer grants. rocket hostage Launched “Purchase Plus” in late December.
Offers up to $7,500 in closing cost credits first time home buyers To use towards their mortgage costs.
Shopping Plus is available in specific census tracts in Atlanta, Baltimore, Chicago, Detroit, Memphis and Philadelphia.
And guaranteed rate Those same cities just launched a “Special Purpose Credit Program” that provides up to $8,000 in assistance to underserved borrowers.
This is a minimum of $5,000 in down payment and closing cost assistanceand up to the additional 1% (or $3,000) of the sale price.
Many types of mortgages require only 3-3.5% down payment
Even if you don’t qualify for zero down financing, only 3% down is required, in line with loans backed by Fannie Mae and Freddie Mac.
Conforming loans are the most common type of mortgage, offered by nearly every bank and lender in the country.
Fannie Mae’s offering is known as a HomeReady mortgage, while Freddie Mac’s offering is called a Home Possible.
Both require a minimum FICO score of 620, which is very low and would be easier for some to qualify for.
Additionally, they allow boarder income so roommates/tenants can contribute to your income to help qualify for the loan.
If you don’t have a 620 FICO score, there is an FHA loan that requires a minimum score of 580 with a 3.5% down payment. Or as low as 500 if you can somehow manage to put down 10%.
If your credit score is low…
If you have a good income and assets, but your credit score is a problem, you may still be in luck.
For example, there is no minimum credit score requirement for a VA loan. VA,
But individual lenders will still impose their own limits, which can be 580 or more. Still, it’s very friendly.
The USDA home loan program also doesn’t impose a minimum credit score, but most lenders want a 640 FICO or higher.
As mentioned above, Fannie Mae and Freddie Mac require a minimum FICO score of 620. However, it is possible to get accepted with a low score If you have a co-borrower with high score.
And the FHA only requires a 580 FICO for maximum financing (3.5% down).
So you have several very generous options to choose from that approve people with very low credit scores.
If your income is limited…
If Income Is Your Problem, You May Still Not Be A Problem Home Loan Types Are quite flexible in this department as well.
The FHA can go even higher to 56.9%. VA doesn’t have a maximum DTI, and can be quite high depending on conditions.
USDA loans are generally stricter and want a DTI of 41% or less, but May Allow up to 46%.
Even if income is an issue for you, there is a possibility of using co-borrower or boarder income to help you qualify.
If you are recently employed…
While income is one thing, employment history is another. Mortgage lenders are happy you’re making what you’re making.
But they want to know that you will continue to make that money in the future. Mortgages can last up to 30 years, remember?
This means they usually want to see two years of employment history to consider income as stable.
but once again exception As a rule and it is often possible to qualify with less than two years of employment. or even a year.
In all types of loans, a explanation letter And supporting documents may allow limited employment history.
For example, a recent graduate may qualify for a mortgage if employment is likely to continue. The same goes for a medical school graduate (see physician mortgage for more on that).
Ultimately, there are plenty of ways around the typical two-year requirement if you can demonstrate employment stability.
It also helps if you have good credit and/or money in the bank to cover such risk.
Jumbo loans are probably the hardest mortgage to qualify for
While I have hopefully highlighted the fact that qualifying for most mortgages is actually pretty easy, there is one category that is not.
I’m talking about jumbo loans, which exceed the conforming loan limit. These loans are offered by jumbo lenders, and are often backed by the companies themselves.
But here’s the thing – 2023 compliant loan limit is $726,200, And the high cost loan limit (for expensive areas of the country) is $1,089,300!
In other words, most people don’t need a jumbo loan anyway.
If you do, expect higher payment requirements, High Minimum FICOsand larger reserve requirements.
After all, you’re asking to borrow a lot of money, so you better be prepared.
This can include a minimum down payment of 10-20%, a FICO score of 680 and above, a low DTI ratio, and several months of payments. inventory in bank.
If you had to ask what is the easiest type of mortgage to get…
Those who read the above sections should realize that qualifying for a mortgage is fairly easy.
Credit score requirements are very low across all types of loans. And in most cases the DTI ratios are also very forgiving.
The same goes for employment history and asset/reserve requirements.
and the fact that you can often employ gift fund Or helping a co-borrower qualify is icing on the cake.
But if you have to ask questions, you might want to reevaluate Your decision to rent vs buy,
There is a reason why all these minimum requirements exist. and there’s a reason It takes about a month to get a mortgage,
This is a big deal and the decision should not be taken lightly. Additionally, those who are adequately prepared should qualify for the lowest mortgage rate with best terms.
So instead of focusing on easy, focus on how to qualify for the best rate.