2 Myths That Are Scaring Buyers
Fannie Mae’s article, “What Consumers (Don’t) Know About Mortgage Qualification Criteria,” reveals “only 5 to 16 percent of respondents know the correct ranges for key mortgage qualification criteria.”
Myth #1: “I Need a 20% Down Payment”
Fannie Mae’s survey revealed consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 76% of home buyers either don’t know (40%) or are misinformed (36%) about down payment requirements. There are loan programs that allow for as little as 3% down. Some down payment assistance programs allow for even less.
Below are the results of a Digital Risk survey of Millennials who recently purchased a home. As you can see, 64.2% were able to purchase their home by putting down less than 20%, with 43.8% putting down less than 10%!
Myth #2: “I need a 780 FICO Score or Higher to Qualify for a Loan”
The survey found 59% of buyers either don’t know (54%) or are misinformed (5%) about what FICO score is necessary to qualify. Many believe a ‘good’ credit score is 780 or higher.
To help debunk this myth, let’s take a look at Ellie Mae’s most recent Origination Insight Report. As you can see below, 54.7% of approved mortgages had a credit score of 600-749.
Real Estate Bottom Line
Whether buying your first home or moving up to your dream home, having good information is crucial. Your dream home may already be within your reach!