2 Major Myths Holding Back Home Buyers

Dated: 01/31/2018

Views: 172

Urban Institute recently released a report entitled, “Barriers to Accessing Homeownership,” which revealed that “eighty percent of consumers either are unaware of how much lenders require for a down payment or believe all lenders require a down payment above 5 percent.

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Myth #1: “I Need a 20% Down Payment                                                                                                                                                                   

Buyers often overestimate the down payment funds needed to qualify for a home loan. According to the same report:

Consumers are often unaware of the option to take out low-down-payment mortgages. Only 19% of consumers believe lenders would make loans with a down payment of 5% or less… While 15% believe lenders require a 20% down payment, and 30% believe lenders expect a 20% down payment.”

These numbers do not differ much between non-owners and homeowners; 39% of non-owners believe they need more than 20% for a down payment and 30% of homeowners believe they need more than 20% for a down payment.While many believe that they need at least 20% down to buy their dream home, they do not realize that programs are available that 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 with programs that have emerged allowing less cash out of pocket.

Myth #2: “I Need a 780 FICO® Score or Higher to Buy”Image title

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, 53.5% of approved mortgages had a credit score of 600-749.  Whether buying your first home or moving up your dream home, knowing your options will make the process easier. Your dream home may be within a reach.



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Tatiana Torres

Buying or selling a house can be an overwhelming and daunting process. Will my home sell? How much can I get for it? What can I afford to buy? All questions that need to be answered by a reliable and ....

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