Getting a home loan can seem intimidating and complex. With so many options available, it can be challenging to determine the easiest type of loan to get approved for when buying a house. However, some loans are designed to be more accessible and require less stringent qualifications than others.
What are FHA Loans?
FHA loans are government-backed mortgages insured by the Federal Housing Administration (FHA). These loans are popular among first-time homebuyers because they require lower down payments and credit scores compared to conventional loans.
Benefits of FHA Loans
- Low down payment – Only 3.5% down payment required. This makes it easier to qualify, especially for buyers with limited funds for a down payment.
- Lower credit score requirements – Minimum credit score of 580 required. More options for those with less-than-perfect credit.
- Low mortgage insurance – FHA loans require mortgage insurance. However, FHA mortgage insurance rates are lower than those for conventional loans.
Why FHA Loans are Among the Easiest to Get
With low barriers to entry regarding down payment and credit score, FHA loans remove common obstacles faced by homebuyers. The relatively low requirements make it one of the easiest loan types to qualify for when purchasing a home.
What are VA Loans?
VA loans are mortgages backed by the Department of Veterans Affairs, designed to help veterans and service members buy homes. VA loans stand out because they require no down payment or private mortgage insurance.
Benefits of VA Loans
- No down payment required – VA loans remove the hurdle of saving for a down payment, making them very accessible.
- No private mortgage insurance – Mortgage insurance is not required, saving borrowers thousands over the loan’s term.
- More flexible credit guidelines – VA loans can qualify borrowers with credit as low as 580, and consider past military service.
- No early payoff penalties – VA borrowers can pay off their loans early with no prepayment penalties. This provides flexibility.
Why VA Loans are Among the Easiest to Get
The zero down payment with no PMI makes VA loans extremely attractive and easy to qualify for. They give veterans and military families easy access to home financing.
What are USDA Loans?
USDA loans are government-backed mortgages aimed at helping low-to-moderate income buyers in rural and suburban areas. These loans offer favorable terms to expand homeownership.
Benefits of USDA Loans
- No down payment required – Borrowers need no down payment, making USDA loans very accessible.
- Flexible credit requirements – USDA loans allow credit scores as low as 640. Past issues won’t necessarily disqualify an applicant.
- Low monthly mortgage insurance – Upfront guarantee fees are low, and monthly mortgage insurance rates are competitive.
Why USDA Loans are Among the Easiest to Get
With lenient credit requirements and no down payment demands, USDA loans are designed to be attainable for a wide pool of buyers. This makes them one of the easier loan programs to qualify for.
Conventional 97 Loans
What are Conventional 97 Loans?
Conventional 97 loans only require a 3% down payment. They are backed by Fannie Mae or Freddie Mac. While not as easy to qualify for as government loans, they offer low down payments.
Benefits of Conventional 97 Loans
- Low 3% down payment – Enables buyers to get into a home with less money down.
- May have lower PMI – Private mortgage insurance may be less than FHA loans depending on applicant’s credit.
- Competitive interest rates – Conventional loans can offer better interest rates for buyers with good credit.
Why Conventional 97 Loans are Relatively Easy to Get
The 3% down payment makes these loans more obtainable than other conventional mortgages. They provide a middle ground – more accessible than standard conventional loans but require better credit than government options.
What is a Streamline Refinance?
A streamline refinance is when an existing mortgage holder refinances into a new mortgage with lower interest, lower payment, or different terms without undergoing full underwriting.
Benefits of Streamline Refinancing
- No appraisal or income verification – Makes the process simple and fast. Reduces hassle.
- Lower monthly payments – Interest rates and terms are reassessed to ideally improve affordability.
- Cash out option – Gives flexibility to tap home equity if needed.
- Shorter loan terms – Some will refinance into a shorter term to build equity and save on interest.
Why Streamline Refinancing is Easy to Obtain
Since streamline refinancing does not require full documentation or underwriting, it provides a smooth process for existing homeowners to modify their home loan to better suit their needs. The eased qualifications make approval attainable.
What is the easiest loan to get for a house? Your Options
When it comes to getting approved for a mortgage loan, government-backed options like FHA, VA and USDA loans generally offer the easiest paths to homeownership. Their low and no down payment options paired with flexible credit guidelines help buyers overcome common obstacles. Streamline refinancing also allows existing homeowners to modify their mortgages with relative ease. While not as easily attained, conventional 97 loans also offer a lower 3% down alternative. Undoubtedly, for most borrowers, FHA and VA loans will provide the easiest route into homeownership or the ability to refinance their current home.
Frequently Asked Questions
What credit score is needed for the easiest loan?
The easiest loans to qualify for only require a credit score as low as 580 (FHA) or 640 (USDA). VA loans allow even lower with no set published minimum. Conventional loans typically require higher scores of 620 or 640.
How much of a down payment do I need?
The easiest loans to get require very low or even no down payment. FHA loans need just 3.5% down, VA loans need 0% down, and USDA loans require no down payment. Conventional 97 loans require 3%.
Which has lower mortgage insurance, FHA or Conventional 97?
FHA mortgage insurance rates are typically lower than mortgage insurance on a conventional 97 loan. However, for buyers with credit scores above 740, a conventional 97 loan may have lower private mortgage insurance.
Can I get approved without income verification?
For a streamline refinance, you can get approved without documenting your income since the lender doesn’t re-underwrite the loan. Full documentation loans do require verified income.
What are closing costs on easy-to-get loans?
Closing costs on government-backed FHA, VA and USDA loans are very similar to closing costs on conventional mortgages, typically between 3-5% of the total loan amount. Closing costs are lower on streamline refinancing.
The bottom line is that government-backed FHA, VA and USDA loans offer the clearest, easiest paths to homeownership or refinancing thanks to low or no down payment requirements, flexible credit guidelines, and streamlined underwriting. For most borrowers, opting for one of these loan types will provide the least resistance and headaches when financing a home. Work with a lender to determine which option best suits your specific needs and financial situation. The right home loan can make realizing the dream of homeownership far more attainable.