To address insufficient mortgage transaction history, borrowers should first enhance their credit profiles by paying bills on time and maintaining low credit utilization. Second, they may leverage alternative credit references, such as rent payments or utility bills, which some lenders accept to compensate for gaps. Third, increasing down payments to 20% or using government-backed programs like FHA loans, which require lower credit scores, can help. Additionally, consulting mortgage brokers to identify lenders flexible with non-traditional histories is critical.

Insufficient mortgage transaction history often stems from limited borrowing experience, particularly among first-time buyers or those with recent credit resets. This gap can deter lenders from assessing repayment risk accurately. For instance, data from the Consumer Financial Protection Bureau (CFPB) shows that 40% of applicants with credit histories under two years face higher denial rates due to thin files. Fannie Mae’s 2022 report highlights that 35% of lenders now consider alternative data, such as utility payments, to evaluate creditworthiness. Meanwhile, FHA loans, which permit scores as low as 580, accounted for 12% of all mortgages in 2023, per the Mortgage Bankers Association, demonstrating how flexible programs mitigate transaction history barriers. Proactive credit building and strategic lender selection are essential to overcome these challenges, as seen in the 28% increase in alternative credit-file approvals from 2021 to 2023 (Federal Reserve, 2024).