--- title: It's Getting Harder to Qualify for a Mortgage description: Mortgage credit availability is at its lowest point since September 2020. authors: - name: Aly J. Yale role: Contributing Writer url: https://money.com/author/aly-j-yale/ bio: Aly J. Yale is a contributing writer focusing on real estate, mortgage and the housing market. Her work has been featured in the Wall Street Journal, Business Insider, Yahoo Finance, CBS and US News & World Report. She served as an editor and reporter for The Dallas Morning News. Aly graduated from Texas Christian University’s Bob Schieffer School of Communication with a major in radio-TV-film and news-editorial journalism. education: Texas Christian University at_money_since: 2020 articles: 100 covers: - Mortgages - Banking - Business - Career Advice - Credit - Housing - Identity Theft - Insurance - Loans - Personal Finance - Professional Services - Retirement also_seen_in: - The Wall Street Journal - Business Insider - Yahoo Finance - US News & World Report - CBS social: - https://twitter.com/AlyJwriter - https://www.linkedin.com/in/alyjyale/ published: '2021-07-20T17:43:17.000Z' modified: '2022-03-17T16:44:36.000Z' section: Mortgages tags: - News - SMM21 word_count: 763 canonical: https://money.com/harder-to-get-mortgage/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We may earn a fee if you click on the links below. Compensation does not determine ranking. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![A house is floating in the sky.](https://img.money.com/2021/07/News-Harder-Qualify-For-Mortgage.jpg) As if rising home prices and stiff competition weren’t enough, homebuyers now face another challenge: Stricter mortgage standards. According to the [Mortgage Bankers Association](https://www.mba.org/2021-press-releases/july/mortgage-credit-availability-decreased-in-june), mortgage loans got harder to come by last month (dropping by about 8.5% from May, in fact). Overall mortgage credit availability is now at its lowest point since September 2020, which “indicates standards are tightening.” “When mortgage availability drops, it’s harder to get a mortgage,” says Joey Abdullah, managing director of Bellco Home Loans. “Typically, you have to have a higher credit score, sometimes larger down payments or, if you’re refinancing, a higher equity position in the house.” ## If you're looking to buy a new home, it's important to know how much you can afford. Find out today. ### With the help of Rocket Mortgage (NMLS #3030), you could get started with solid advice and valuable information. Click on your state to learn more. [View Rates](https://money.com/pr/uba659d0568a?ap_referrer=%2Fharder-to-get-mortgage%2F) ## Conventional loans are hardest to come by MBA’s data suggests that standards tightened most on conventional and conforming loans — those eligible for purchase by Fannie Mae and Freddie Mac. These became 23.5% less available in June. According to Abdullah, refinancers, investors, self-employed buyers and second home buyers have the most to worry about when it comes to qualifying. “We’re seeing this especially on the refinance side of the house,” he says. “Availability of credit has also diminished on non-owner-occupied homes.” The tighter standards stem from pandemic-spurred policy changes implemented by both Fannie and Freddie, which made it harder for those with high loan balances to refinance their mortgages. The two government-sponsored agencies also reduced the number of investment and second-home loans they would purchase, so these loan options decreased as well. Fortunately, the difficulties shouldn’t last for long — at least for [refinancers](https://money.com/is-now-a-good-time-to-refinance/). For one, there’s a bit of lag time between the data and when MBA reports. For example, Brian Koss, EVP of Mortgage Network, says he’s already seen things improve in recent weeks. “It’s actually loosened up a bit because you’re seeing the economy do better,” Koss says. Additionally, both Fannie Mae and Freddie Mac have launched [new refinance programs](https://money.com/new-mortgage-refinance-programs/) this month, which should make refinancing easier for low-income and high-loan-value borrowers. The Federal Housing Finance Administration also recently [removed the adverse market fee](https://money.com/mortgage-refinance-fee-eliminated/) it imposed on refinance loans last year. This should reduce the [interest rates](https://money.com/current-mortgage-rates/) that conventional borrowers see when refinancing. “Your interest rates are more attractive than they were this time last week,” Koss says. “It equals about an eighth of a percent.” ## Government loans aren’t as challenging The problem appears to be isolated to conventional loans, so for borrowers who opt for government-backed mortgages — [FHA loans](https://money.com/what-is-an-fha-loan/), [VA loans](https://money.com/best-va-loans/) and [USDA loans](https://money.com/usda-loans-coronavirus-suburbs/), there shouldn’t be any new challenges. According to MBA, lending standards have remained fairly steady on those products since early last year. “There was minimal change in the government mortgage credit availability index,” says Mike Tassone, CEO of mortgage marketplace Own Up. “It indicates that the most at-risk borrowers — those with low down payments, below-average credit and/or lower income-higher debt-to-income ratios — did not see a significant loss of credit availability.” According to Tassone, lenders in the Own Up marketplace are currently requiring about a minimum credit score of 600 on FHA loans. While this is up slightly from pre-pandemic levels when minimums were as low as 500 to 580 in some cases, it’s “certainly an improvement” compared to a few months ago, he says. Another perk of these loans? FHA recently eased up on how it treats [student loan debt](https://money.com/mortgage-student-loans-tips/) for borrowers. Tassone says it “should meaningfully improve access to credit for those borrowers with student loans seeking a mortgage.” ## Buying a home doesn't have to be hard. Let Rocket Mortgage experts guide your every step. ### Consulting with a mortgage expert is a smart way to get all the facts and make a well-informed decision. Click below and book it now. [View Rates](https://money.com/pr/u7135494de72?ap_referrer=%2Fharder-to-get-mortgage%2F) ## How to improve your chances If you’re struggling to qualify for a mortgage loan, there are several ways you can improve your chances. According to Emanuel Santa-Donato, VP of capital markets at mortgage lender Better, increasing your [credit score](https://money.com/7-ways-to-improve-credit-score/) is one of the best strategies. “Tighter lending standards mean the higher your credit score, the better,” Donato says. “The higher your credit score, the more financing options and better rates you’ll be able to get, which can lead to significant savings over the life of your mortgage.” You can also work on lowering your [debt-to-income ratio](https://money.com/debt-income-ratio-calculator/) — or how much of your monthly income goes toward debt. If you’re not able to improve your credit score or DTI quick enough to make an impact, Abdullah says it’s still possible to buy or refinance a house — but expect more scrutiny when you do. “Don’t be discouraged by this one data point or this one month,” Abdullah says. “Just be prepared for a more detailed loan process going forward.” ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/harder-to-get-mortgage/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Mortgages", "item": "https://money.com/mortgages/" }, { "@type": "ListItem", "position": 3, "name": "Mortgage Loan", "item": "https://money.com/mortgage-loan/" }, { "@type": "ListItem", "position": 4, "name": "It's Getting Harder to Qualify for a Mortgage" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/harder-to-get-mortgage/#webpage", "url": "https://money.com/harder-to-get-mortgage/", "name": "It's Getting Harder to Qualify for a Mortgage", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2021-07-20T17:43:17.000Z", "mainEntity": { "@id": "https://money.com/harder-to-get-mortgage/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/harder-to-get-mortgage/#breadcrumb" }, "dateModified": "2022-03-17T16:44:36.000Z" }, { "@type": "NewsArticle", "headline": "It's Getting Harder to Qualify for a Mortgage", "articleSection": "Mortgages", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2021/07/News-Harder-Qualify-For-Mortgage.jpg", "width": 2880, "height": 1920, "caption": "News-Harder-Qualify-For-Mortgage" } ], "author": [ { "@type": "Person", "name": "Aly J. 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