Can paid off loans count as tradelines for a conventional mortgage?

Question:

My partner and I are looking to buy a home, and we have strong credit scores and enough for a 15-20% down payment, but we were told by our bank that because we paid off two of our loans, a student loan and a car loan, we won’t have enough trade lines to qualify for conventional mortgage. Can loans that have been paid off count as trade lines for conventional mortgage?

Answer:

Yes, you can have loans that have been paid off and only have one active trade line and still get qualified for a mortgage. Furthermore, Fannie Mae and Freddie Mac (two organizations that influence much of the mortgage qualifying criteria that lenders and borrowers are submitted to) don’t even have a minimum number of open trade lines requirement. Your loan officer would need to run your loan through either Fannie Mae or Freddie Mac system and get an approval, but having only two open trade lines will not disqualify you.

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