What’s the Lowest Mortgage Amount You Can Get?

Couple embracing each other as they look at their new house outside from their front lawn.

Finding a small mortgage loan can be hard work. Many lenders disclose their maximum mortgage amount available, but not their minimum, so finding the right loan can involve a bit of research.

If you compare lenders, you'll find there isn't necessarily a single lowest standard mortgage amount. Instead, different lenders have different minimums. Here's what to know.

What Is the Minimum Mortgage Loan Amount You Can Borrow?

When it comes to mortgage types, each lender offers different products. Researching the market will show you there's a lot of variation in interest rates, closing costs and requirements to qualify.

But finding a lender that offers small mortgages can present a special challenge. When it comes to loan amounts, most lenders don't disclose their minimums. Generally speaking, you may have trouble finding a mortgage below about $60,000, unless you're searching for a specific, unconventional loan type (more on that below).

While mortgage minimums vary, qualification requirements are relatively consistent across lenders. As you search for and prepare to apply for the right loan, keep these common requirements in mind:

  • Credit score: There's no hard-and-fast credit score that qualifies you for a mortgage, but many lenders require a minimum score of 620 (certain government-backed mortgages have lower requirements). The higher your score, the better the terms you'll qualify for.
  • Work history: Lenders want assurance your income is stable enough to cover your loan payments over the long haul, so qualifying may include a requirement that you have proof of steady employment. Some mortgage lenders even require a two-year record of work for your current employer or in your current field.
  • Down payment: Even if you're taking out a smaller-sized mortgage, your lender will likely require that you bring some of your own money into the transaction. Generally, you'll need to put down 20% of the purchase price to avoid paying private mortgage insurance. But many buyers can still find a lender even if they have a down payment as low as 5%.

Things to Look Out for When Shopping for Small Mortgage Loans

Even when you're looking for a small mortgage, the details still matter. If you're not careful, borrowing a small amount could be more expensive than taking out a big loan.

Closing costs are one of the details you should pay close attention to, since these can come out to around 3% to 4% of your total purchase price. You'll also want to understand your total interest cost. It might not seem that important for a smaller loan amount, but the difference between 3% and 5% APR on a $100,000 loan with a 15-year repayment is over $18,000 in interest charges.

As with any financing you shop for, be sure to compare costs and rates between one lender and another. Getting prequalification offers can help you review quotes without hurting your credit, and as an added benefit you can use the offers to negotiate better deals between one lender and the next. Just keep in mind that terms and rates could change if your credit or other factors change when you apply for the loan.

How to Find a Small Mortgage Loan

When you shop around for your mortgage, you may need to check out several different types of lenders, not just big banks. While Bank of America offers mortgages starting at $60,000, you may not find another bank of that size to work with you.

A local bank or credit union may be more willing to work with smaller-dollar loans or even have special incentives to invest in your community. Key Bank, which operates in 15 U.S. states, has a special Community Mortgage program with no minimum loan amount for mortgages. To qualify, you may have to meet special requirements, including attendance of a homebuyer education workshop.

Alternatives to Small Mortgage Loans

Alternatively, you may be able to get the money you need without taking out a mortgage loan. Instead of getting a loan that requires your home as collateral, you could try qualifying for a personal loan. Just keep in mind that without collateral, your interest rate may be much higher.

You could also try getting more specific about the type of loan you want. If you're planning to buy a tiny house, try searching specifically for tiny-house financing.

If you're in the market for a condominium, look for lenders who offer condo-specific loans, like the Federal Housing Administration (FHA). The process of getting approved for this type of loan can be a bit different from a standard mortgage, so you may need to let your lender know upfront. If you're interested in getting an FHA loan, try starting your search by using HUD.gov to see approved units in your area.

Getting Your Credit Ready

If you need a small-dollar mortgage loan, finding a lender might not be your only obstacle. Even if you're borrowing a small amount, having poor credit or no credit could get in the way of your approval.

Before you start shopping around, pull your free credit report and score to see where you stand. Check to see if there's room for improvement or if there are inaccuracies you can address in your credit file. Taking this step, before you take out a loan, could help you qualify for better rates and save you a lot of cash in the long run.