2 Myths About Mortgages Holding Back Home Buyers

Knowledge is power, but all too often it may be backed by “alternative facts” which is the case of the 2 myths about mortgages holding back Home buyers. Fannie Mae’s article, “What Consumers (Don’t) Know About Mortgage Qualification Criteria,” revealed that “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 many overestimate the down payment needed to qualify for a home loan. According to the report, 76% of Americans either don’t know (40%) or are misinformed (36%) about the minimum down payment required.

Many believe they need at least 20% down to buy their dream home. Many programs actually let buyers put down as little as 3%.

Below are the results of a Digital Risk survey of Millennials who recently purchased a home.

This shows 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 Buy”

The survey also revealed that 59% of Americans either don’t know (54%) or are misinformed (5%) about what FICO score is necessary to qualify. Many Americans believe a ‘good’ credit score is 780 or higher.

Ellie Mae’s latest Origination Insight Report focuses on recently closed (approved) loans debunks these Myths. As you can see below, 54.7% of approved mortgages had a credit score of 600-749.

Bottom Line

Whether buying your first home in Northern VA or moving up to your dream home, knowing your options will make the mortgage process easier. Your goal of home ownership may already be within your reach.