Is it difficult to get a mortgage right now?
Getting a mortgage is still tricky, but not because of lending standards. Qualifying for a traditional mortgage type has never been a given, but it is certainly easier right now than it was immediately following the Great Recession.
Credit availability is expanding, and it may be easier to get a mortgage now than before. Be aware the market is still tight, and you may have to work around it until you find the lender that works with what you need. With all the standards and requirements, the mortgage market can be strict and hard to get.
Previously, lenders based their decision on how much to lend primarily on a multiple of the borrower's income. However, borrowers now have to complete an more extensive application process that involves detailing utility bills, and other outgoings, such as monthly childcare expenses, and debt repayments.
In addition to rejection rates, adults over 60 do pay higher interest rates than younger borrowers. But, Amornsiripanitch found, this trend applies across the board.
Banks are purposely making it harder for consumers to obtain loans, according to a new survey conducted by the Federal Reserve. Standards for business, mortgage, credit card, automotive and other types of loans are continuing to be tightened by banks due to a rough economic climate.
While it's true that recessions can create opportunities to purchase homes at potentially lower prices, it's not guaranteed. Waiting for a recession to buy a house may not be the best strategy as home prices could remain high regardless of a recession.
Mortgage approval with FHA loans
If your score is low because you have little credit history, too many accounts, or bad history that's at least a year old, FHA may give you a shot. But if you're missing payments all the time or have multiple collections, you're too risky.
If you have poor credit, consider an FHA loan, which allows for credit scores as low as 580 (or 500 if you can make a 10 percent down payment on the home). If you're eligible, a VA loan (for service members and veterans) or a USDA loan (for buyers in rural areas) might also be easier to qualify for.
The 28/36 rule dictates that you spend no more than 28 percent of your gross monthly income on housing costs and no more than 36 percent on all of your debt combined, including those housing costs.
Mortgage demand slumped last week as consumers hit the brakes on purchase applications. Mortgage applications decreased by 7.2% in the week ending Jan. 26 compared to one week earlier on a seasonally adjusted basis, according to the Mortgage Bankers Association's (MBA) weekly mortgage applications survey.
Is it too late to buy a house at 40?
Age doesn't matter. Counterintuitive as it may sound, your loan application for a mortgage to be repaid over 30 years looks the same to lenders whether you are 90 years old or 40.
Absolutely. The Equal Credit Opportunity Act's protections extend to your mortgage term. Mortgage lenders can't deny you a specific loan term on the basis of age.
Younger homeowners are more at risk of being rejected perhaps reflecting a lack of time to build up a strong credit profile. Four in 10 (41%) 18 to 24-year-old homeowners have experienced a mortgage rejection before buying their current home. That compares to 15% of 35 to 44-year-olds and 8% of those aged 45 to 50.
| Lender | APR | Approval/Funding Timeline |
|---|---|---|
| LightStream | 7.49% - 25.99% | Same day - 2 business days |
| Best Egg | 8.99% - 35.99% | 2 - 4 business days |
| Upgrade | 8.49% - 35.99% | 2 - 3 business days |
| OppLoans | 160% - 179% | 2 - 3 business days |
The easiest banks to get a personal loan from are USAA and Wells Fargo. USAA does not disclose a minimum credit score requirement, but their website indicates they consider people with scores below 640, so even people with bad credit may be able to qualify.
Requirements such as credit score and income vary by lender, and some online lenders consider nontraditional data, like free cash flow or education level. But loan companies have one thing in common: They want to be paid back on time, which means they approve only borrowers who meet their requirements.
NAR forecasts that sales will rise by 13 percent in 2024. “Housing sales are expected to increase a bit from this year,” agrees Chen Zhao, who leads the economics team at Redfin. “However,” she qualifies, “we are not expecting sales to increase dramatically, as rates are likely to remain above 6 percent.”
Home sales expected to rise in 2024
As more inventory and slightly lower mortgage rates create more breathing room for buyers, sales of existing homes are expected to go up, according to NAR's forecast.
And as you might imagine, recessions are a risky time to buy a home. If you lose your job, for example, a lender will be much less likely to approve your loan application. Even if the recession doesn't affect you directly, if your area is hard-hit, that could have a serious effect on the local real estate market.
In fact, the UK places sixth on a list of 10 countries where it's most difficult to get on the property ladder. The only countries where it's even harder to become a homeowner are Switzerland, China, Japan, France and Kenya.
How long does it take to get approved for mortgage?
From application to approval and closing, getting a mortgage can take anywhere from 30 days to 60 days. However, some home purchases can take longer, depending on factors unique to the purchase transaction and the home loan processing time.
| Loan program and purpose | Closing rate |
|---|---|
| Conventional purchase | 80% |
| FHA refinance | 65% |
| FHA purchase | 78% |
| VA refinance | 72% |
What income is required for a 200k mortgage? To be approved for a $200,000 mortgage with a minimum down payment of 3.5 percent, you will need an approximate income of $62,000 annually. (This is an estimated example.)
1. Conventional loans. A conventional loan is any mortgage that's not backed by the federal government. Conventional loans have higher minimum credit score requirements than other loan types — typically 620 — and are harder to qualify for than government-backed mortgages.
- DHA Mortgage Company: 4.32%
- Citizens Bank: 4.37%
- Bank of America: 4.40%
- Amerisave: 4.41%
- Rocket: 4.50%
- Nationstar: 4.54%
- American Financing Corporation: 4.57%
- Freedom Mortgage: 4.62%
