Home-buyers, Your dream home may already be within your reach.
Buying your first home or moving up to your dream home, know your options. It will make the mortgage process easier.
Urban Institute recently released a report: “Barriers to Accessing Homeownership: Down Payment, Credit, and Affordability.”
“[Home-buyers] often think they need to put more money down to purchase a home than is actually required. In a 2017 survey, 68% of renters cited saving for a down payment as an obstacle to homeownership. 39% of renters believe that more than 20% is needed for a down payment. Also, many renters are unaware of low–down payment programs.”
Myth #1: “I Need a 20% Down Payment” to be a Home-Buyer
Buyers often overestimate the down payment needed to qualify for a home loan. According to the same report:
“Most potential homebuyers are largely unaware that there are low-down payment and no-down payment assistance programs available at the local, state, and federal levels to help eligible borrowers secure an affordable down payment.”
Non-owners and homeowners have similar incorrect beliefs. For example, “30% of homeowners and 39% of renters believe that you need more than 20 percent for a down payment.”
Many potential buyers believe that they need at least 20% down to buy their dream homes. They do not realize that there are programs available which allow them to put down as little as 3%. Many renters may actually be able to enter the housing market sooner than they ever imagined. Programs have emerged that allow less cash out of pocket.
Myth #2: “I Need a 780 FICO® Score or Higher to be a Home-Buyer”
Similar to the down payment, many either don’t know or are misinformed about what FICO® score is necessary to qualify.
Many Americans believe a ‘good’ credit score is 780 or higher.
To help debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans.
As you can see in the chart above, 51.7% of approved mortgages had a credit score of 600-749.
Bottom Line
Whether buying your first home or moving up to your dream home, knowing your options will make the mortgage process easier. Your dream home may already be within your reach.
