The Mortgage Bankers Association reported this week that its Mortgage Credit Availability Index rose 1.1% in March 2026 to a reading of 108.3 – the highest level since August 2022. This marks the third consecutive month of expanding credit, with gains across government, conventional, and jumbo loan categories. For borrowers preparing to buy or refinance, this shift means lenders are offering more loan products to more people than at any point in nearly three years.
Rising credit availability does not mean reckless lending. It means that more borrowers now have access to programs that match their financial situations, including those with lower credit scores, non-traditional income, or unique circumstances like pastoral housing allowances. This post breaks down what the numbers mean, why they are changing, and how you can take advantage of a more open lending environment this spring.
What Is the Mortgage Credit Availability Index?
The MBA Mortgage Credit Availability Index tracks the overall supply of mortgage credit in the United States. Joel Kan, MBA vice president and deputy chief economist, noted that the March reading of 108.3 reflects “growth in streamline refinance programs for lower credit score borrowers” alongside expansion in conventional and jumbo offerings. The index uses a baseline of 100 set in 2012, meaning today’s reading indicates credit is slightly more available than it was during that benchmark year.
The MCAI is divided into component indices that track different loan types separately. In March, the government component – which includes FHA, VA, and USDA loans – rose 1.7%, reversing a 0.8% decline from February. The conventional component grew 0.6%, while the jumbo index climbed 0.8% for its third consecutive monthly gain. These numbers matter because they show that credit is expanding across the board, not just in one corner of the market.
Why the Index Matters for Everyday Borrowers
When the MCAI rises, it means lenders are adding new loan programs, loosening qualification criteria, or both. For borrowers, this translates into more options. A family that might have been declined for a conventional loan six months ago may now qualify through an expanded program. A veteran exploring VA loan options has more lenders competing for that business with better terms. If you are wondering whether you qualify for a mortgage today, the expanding index suggests it is worth checking. You can start by exploring the loan options available through Fellowship Home Loans to see what programs fit your situation.
Why Is Mortgage Credit Expanding Right Now?
According to American Banker reporting on the MBA data, the March expansion reflects a broader trend of lenders loosening standards after years of post-pandemic caution. Several factors are driving this shift at the same time, creating a window of opportunity for borrowers who may have struggled to qualify in tighter markets.
The Federal Reserve has held its federal funds rate steady at 3.50-3.75% since December 2025, following three consecutive rate cuts in the second half of that year. While 30-year mortgage rates have been volatile – dipping below 6% in late February before climbing back to the mid-6% range in March – the overall rate environment is meaningfully lower than the 7% peaks seen in 2023 and 2024. Lower rates reduce lender risk on each loan, which encourages them to expand their product offerings.
Where Lenders Are Loosening Standards
The MBA data shows that credit expansion is not uniform across all loan types. Government-backed products saw the largest gain at 1.7%, driven by new FHA streamline refinance programs targeting borrowers with credit scores below 680. The jumbo segment – loans exceeding the $832,750 conforming limit set for 2026 – grew for the third straight month as non-qualified mortgage programs attracted more lender participation. Conventional credit grew more modestly at 0.6%, reflecting continued caution from Fannie Mae and Freddie Mac on underwriting standards.
MBA CEO Bob Broeksmit also highlighted that increasing housing inventory is easing supply constraints, which creates a healthier lending environment overall. When more homes are available, bidding wars cool down, appraisals come in closer to contract prices, and lenders face fewer risks on individual loans. Understanding how the mortgage process works can help you prepare to move quickly when you find the right home in this improving market.
How Does Easier Credit Affect Your Home Purchase?
The Scotsman Guide reported that despite the positive credit trends, March brought significant rate volatility linked to the Iran conflict that began in late February 2026, pushing energy costs higher and creating investor uncertainty. Mortgage rates swung from the high-5% range in late February to approximately 6.5% by the end of March, according to the MBA weekly application survey data.
This creates a mixed environment for buyers. On one hand, more loan programs are available and qualification standards are more flexible than they have been in three years. On the other hand, rate volatility means your monthly payment could look very different depending on when you lock your rate. For a $350,000 mortgage, the difference between a 6.0% and a 6.5% rate is approximately $112 per month – or over $40,000 over the life of the loan.
What This Means for First-Time Buyers
First-time buyers benefit the most from expanding credit availability because they are often the ones who face the tightest qualification hurdles. FHA loans, which allow down payments as low as 3.5%, saw their credit availability grow faster than any other category in March. Borrowers with credit scores in the 620-680 range now have access to more lender options than at any point since 2022.
If you have been waiting on the sidelines because you were not sure whether you would qualify, the current market conditions favor running the numbers. Use the Fellowship Home Loans mortgage calculator to estimate your monthly payment based on today’s rates, and then connect with a loan officer to see which programs you qualify for. The spring market traditionally offers the best combination of inventory and buyer motivation, and this year’s credit environment adds another advantage.
Should You Apply Before Credit Tightens Again?
Credit availability is cyclical, and the MBA data shows that the current reading of 108.3, while the highest in three years, remains near the lower end of the historical range. Joel Kan noted that while “there was growth across all loan types,” the overall supply of credit is still conservative compared to pre-2008 levels. This is not a return to loose lending – it is a measured expansion that could reverse if economic conditions shift.
Several factors could tighten credit again in the coming months. If inflation remains above the Fed’s 2% target – the Consumer Price Index rose 4.2% year-over-year in the most recent reading, according to the Bureau of Labor Statistics – the Fed may delay further rate cuts or even consider a pause that would push mortgage rates higher. Geopolitical uncertainty from the ongoing Iran conflict continues to create volatility in bond markets, which directly affects mortgage pricing. And if loan performance weakens in any category, lenders will pull back quickly.
How to Position Yourself as a Strong Borrower
Even in an expanding credit environment, the strongest borrowers get the best terms. Focus on three areas that lenders evaluate most closely. First, keep your debt-to-income ratio below 43% – this is the threshold most conventional programs use as a ceiling. Second, save for a down payment of at least 3.5% for FHA or 5% for conventional loans, though 10-20% will eliminate private mortgage insurance and reduce your rate. Third, review your credit report for errors and address any collections or late payments before applying.
For pastors and church staff, mortgage qualification involves additional considerations around how housing allowance income is documented and counted. Fellowship Home Loans has deep experience navigating these requirements and can help you present your income in the strongest possible light. Reach out to our team to discuss your specific situation and explore which loan programs align with your financial goals.
Frequently Asked Questions
What does the Mortgage Credit Availability Index measure?
The MCAI is published monthly by the Mortgage Bankers Association and tracks the overall supply of mortgage credit by analyzing the number and variety of loan programs available from lenders across the country. A higher reading means more programs and more flexible qualification standards are available to borrowers.
What does the March 2026 reading of 108.3 mean?
The 108.3 reading means credit availability is 8.3% above the 2012 baseline of 100 and is at its highest point since August 2022. It indicates that lenders are gradually offering more loan products to more borrower profiles after years of tightening standards.
Does higher credit availability mean it is easier to get approved?
It means there are more programs available, which increases your chances of finding one that fits your profile. Lenders still evaluate your credit score, income, debt levels, and employment history. The difference is that more product options exist for borrowers who fall outside traditional qualification windows.
Which loan types saw the biggest improvement?
Government-backed loans (FHA, VA, USDA) saw the largest gain at 1.7% in March, followed by jumbo loans at 0.8% and conventional loans at 0.6%. FHA streamline refinance programs for borrowers with lower credit scores drove much of the government loan expansion.
How do mortgage rates affect credit availability?
Lower rates reduce lender risk on each loan, which encourages them to offer more programs and accept borrowers with less traditional profiles. When rates spike, lenders tend to tighten standards because higher rates increase the chance of borrower default over time.
Is now a good time to apply for a mortgage?
The combination of expanding credit availability, increased housing inventory, and competitive lender offerings makes spring 2026 a favorable window for borrowers. However, rate volatility means timing your rate lock carefully is important. Speaking with a loan officer about your specific situation is the best way to determine whether the current market works for your goals.
Can I qualify with a lower credit score now?
The expansion in government credit availability specifically targets borrowers in the 620-680 credit score range through new FHA streamline programs. VA loans remain available with no minimum credit score requirement from the VA itself, though individual lenders may set their own floors. If your score has improved recently, it is worth checking what you qualify for today.
How does Fellowship Home Loans help with unique income situations?
Fellowship Home Loans specializes in working with borrowers who have non-traditional income documentation, including pastors with housing allowances, self-employed professionals, and church staff with varied compensation structures. Our team understands how to present these income types to underwriters in a way that maximizes your qualification potential.
