Know Down Payment Options
A survey by Ipsos found that people are still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. Don’t rely on friends or family to share what they’ve heard!
The 2 big misconceptions about getting a purchase loan are:
1. Down Payment
The survey showed consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 40% of consumers think a 20% down payment is always required. In reality, there are many loans written with a down payment of 3% or less.
Many renters may be able to enter the housing market sooner than they ever imagined – new loan programs allow for less cash out of pocket.
2. FICO® Scores
The survey also revealed 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. Data shows the average FICO® scores of approved conventional and FHA mortgages are much lower.
The average conventional loan closed in February 2017 had a credit score of 752, while FHA mortgages closed with a score of 686. The average across all loans closed in February was 720.
Real Estate Bottom Line
If you are a prospective buyer, let’s get together so I can help you understand your options.