'This presents a problem.' Here's the biggest barrier to getting a mortgage now (2024)

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Plenty of Americans dream of buying a home — and with mortgage rising, and predicted to keep climbing, that’s getting harder to do (check out the lowest mortgage rates you can get now here). One survey from the National Association of Realtors found that roughly six in 10 aspiring buyers think that getting a mortgage would be hard for them. But experts say that if you’re aware of the barriers you might face, you can better prepare to cut through all the red tape.

“The biggest barrier to getting a mortgage is the step that comes before it: making a successful offer on a house. Competition among home buyers is ferocious,” says Holden Lewis, home and mortgage expert at NerdWallet. (You can find tips on how to make a successful offer on a home here.) After you do that, though, here are the mortgage barriers you should be aware of.

The costs are too high

You’re looking for a low-value mortgage

According to research conducted in 2020 by The Urban Institute, buying a home is harder than ever for families, especially those who are first-time homeowners because small-dollar mortgages aren’t readily available. “Affordable, low-cost properties in urban, suburban, and rural communities still exist, but access to the small-dollar mortgages needed to finance them is not readily available. Potential homeowners not only find fewer lenders offering small-dollar mortgages, but once they do and they apply, we find they are more likely to be denied than potential homeowners applying for larger loans,” the institute writes. That said, options do exist for a low-value mortgage, but it may take significantly more homework. (Check out the lowest mortgage rates you can get now here.)

You have credit issues and income disruptions

“The income disruption that millions of households have experienced since the outbreak, and that many are still experiencing, could make it difficult to qualify if the income coming in is still not back to normal,” says Greg McBride, chief financial analyst at Bankrate.What’s more, even if your income is returning, you may have had some dings on your credit score during low-income times as you struggled to pay your bills. This isn’t insurmountable: by not missing payments going forward, catching up on past-due accounts, paying down revolving account balances and limiting how often you apply for new accounts, you can help bring your credit score to a more acceptable range. And when it comes to your income, you may want to look for ways you can add other streams of income before applying for a mortgage.

You’re self-employed

The past year has been especially rough on self-employed borrowers, and “lenders scrutinize everything from the company’s website to ensure there are no pandemic-related closures or business restrictions, to bank statements, to backup profit and loss statements used to qualify for a refinance,” says LendingTree’s senior staff writer Denny Ceizyk. Here’s what you should consider if you’re self-employed and want to get a mortgage.