Mortgage Q&A: “What is the easiest type of mortgage to get?”

Relative to other types of loans, it can be difficult to get approved for a mortgage.

After all, mortgage lenders typically require a tri-merge credit report, steady income and employment, and assets 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 you’re a creditworthy borrower capable of financing a piece of real estate.

Easiest Types of Mortgages to Get, Ranked

1. FHA loan (lowest combination of credit score and down payment)
2. Conforming loan (lower min. down payment but need 620 FICO)
3. VA loan (zero down and no min. FICO but must be active duty/veteran)
4. USDA loan (zero down, no min. FICO but must be rural location and there are income limits)
5. Jumbo loan (usually need 10%+ down payment, 680+ FICO, and asset reserves)

FHA loans are the easiest mortgage to get because of the 3.5% down payment and 580 minimum FICO score required.

Conforming loans are a close second, despite a lower 3% minimum down payment, due to the higher 620 minimum FICO score required.

Both USDA and VA loans don’t require a down payment and technically don’t have a minimum FICO requirement, but are more specialized products. Thus not as easy.

Jumbo loans are typically the hardest to get because they are larger (loan amounts) and aren’t backed by Fannie/Freddie or the government.

Tip: If you already have a mortgage, a streamline refinance can be even easier to qualify for.

The Answer Depends on What Your Issue(s) Might Be

Before we get down to the nitty gritty, I should note that there isn’t a universal answer to this question.

It depends what may make obtaining a home loan difficult to begin with.

Are your credit scores not all that good? Do you have limited income? No money in the bank? Or perhaps a combination of all these items?

The first thing you should do is self-evaluate. Take a look at your income (and employment history), your credit report (and scores), and your assets.

Would you lend yourself a mortgage? Funnily enough, even if you wouldn’t, there’s probably a lender that would!

Jokes aside, take the time to do this to see where you stand before you apply for a mortgage.

Easy street isn’t necessarily the best avenue to take when it comes to home loan financing.

Now let’s discuss particulars based on some common issues.

If You Lack a Down Payment for a Mortgage

If down payment funds are your problem, there are plenty of zero down home loan options out there.

The two most common are VA loans and USDA loans. However, these are reserved for military/veterans and those buying in rural areas, respectively.

Assuming either of those are YOU, the down payment is no longer a hurdle. They allow 100% financing.

Even if you don’t qualify for those loan types, there are credit unions that offer zero down mortgages.

And many state housing finance agencies that offer grants and down payment assistance.

Some private lenders also offer grants. Rocket Mortgage launched “Purchase Plus” in late December.

It offers up to $7,500 in closing cost credits for first-time home buyers to use toward their mortgage costs.

Purchase Plus is available in specific census tracts in Atlanta, Baltimore, Chicago, Detroit, Memphis and Philadelphia.

And Guaranteed Rate just launched a “Special Purpose Credit Program” in the same cities that provides up to $8,000 in assistance to underserved borrowers.

That’s a minimum of $5,000 in down payment and closing cost assistance, and up to an additional 1% of the sales price (or $3,000).

Many Types of Mortgages Only Require a 3-3.5% Down Payment

Even if you don’t qualify for zero down financing, conforming loans backed by Fannie Mae and Freddie Mac only require 3% down.

Conforming loans are the most common type of mortgage, offered by pretty much every bank and lender in the nation.

Fannie Mae’s offering is known as HomeReady Mortgage, while Freddie Mac’s is called Home Possible.

Both require a minimum FICO score of 620, which is pretty low and what some would consider easy to qualify for.

Additionally, they allow for boarder income so roommates/renters can contribute to your income to help qualify for the loan.

If you don’t have a 620 FICO score, there’s the FHA loan, which requires a minimum score of 580 with 3.5% down payment. Or as low as 500 if you can muster 10% down somehow.

If Your Credit Scores Are Low…

If you’ve got decent income and assets, but your credit scores are a problem, you still might be in luck.

For example, there is no minimum credit score requirement for VA loans, per the VA.

But individual lenders will still impose their own limits, which may be 580 or higher. Still, that’s very accommodating.

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 620 FICO. However, it’s possible to get approved with a lower score if you have a co-borrower with higher scores.

And the FHA only requires the 580 FICO for max financing (3.5% down).

So you’ve got several very liberal options to choose from that approve those with pretty low credit scores.

If Your Income Is Limited…

If income is your problem, you may still not have any issues as most home loan types are also pretty flexible in this department too.

With regard to your debt-to-income ratio (DTI), a conforming loan backed by Fannie Mae will allow a DTI ratio as high as 50%.

The FHA can go even higher, to a staggering 56.9%. The VA doesn’t have a maximum DTI, and can also go quite high depending on the circumstances.

USDA loans are generally stricter and want a DTI of 41% or lower, but may allow up to 46%.

Even if income is an issue for you, there’s the possibility to use a co-borrower or boarder income to help you qualify.

[What Mortgage Has the Best Rate?]

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’ll be making that money consistently into the future. Mortgages can last 30 years, remember?

This means they typically want to see a two-year employment history to consider the income stable.

But once again, there are exceptions to the rule and it’s often possible to qualify with less than two years employment. Or even one year.

Across all loan types, a letter of explanation and supporting documentation may allow for limited employment history.

For example, a recent graduate may qualify for a mortgage if employment is likely to continue. Same goes for a medical school graduate (see physician mortgages for more on that).

Ultimately, there are lots 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 offset such a risk.

Jumbo Loans Are Probably the Hardest Mortgages to Qualify For

While I’ve hopefully highlighted the fact that most mortgages are actually pretty easy to qualify for, there’s one category that isn’t.

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 – the 2023 conforming loan limit is $726,200. And the high-cost loan limits (for expensive areas of the country) are a whopping $1,089,300!

In other words, most folks don’t need a jumbo loan anyway.

If you do, expect higher down payment requirements, higher minimum FICOs, and larger reserve requirements.

After all, you’re asking to borrow a lot of money, so you better be good for it.

This might entail a minimum down payment of 10-20%, FICO scores of 680 and up, lower DTI ratios, and several months of reserves in the bank.

If You Have to Ask What Is the Easiest Type of Mortgage to Get…

Those who read the sections above should realize it’s fairly easy to qualify for a mortgage.

Credit score requirements are super low across all loan types. And DTI ratios are also very forgiving in most cases.

The same goes for employment history and asset/reserve requirements.

And the fact that you can often employ gift funds or a co-borrower to help qualify is the icing on the cake.

But if you have to ask the question, you may want to reassess your decision to rent vs. buy.

There’s a reason all these minimum requirements are in place. And there’s a reason why it takes around a month to get a mortgage.

It’s a big deal and the decision shouldn’t be taken lightly. Additionally, those who are adequately prepared should qualify for the lowest mortgage rates with the best terms.

So instead of focusing on easy, focus instead on how to qualify for the best rate.

Read More: 21 Things That Can Push Your Mortgage Rate Higher