In Realtor.com’s recent article, “Home Buyers’ Top Mortgage Fears: Which One Scares You?” they mention that “46% of potential home buyers fear they won’t qualify for a mortgage to the point that they don’t even try.”
Myth #1: “I Need a 20% Down Payment” Buyers overestimate the down payment funds needed to qualify for a home loan. According to a recent Homeownership Program Index (HPI) from Down Payment Resource, saving for a down payment was the barrier that kept 70% of renters from buying. Rob Chrane, CEO of Down Payment Resource had this to say, “There are many mortgage-ready renters today, but they don’t know it. Often, homebuyers remain sidelined for years due to the down payment.”
Many believe that they need at least 20% down to buy a home, but programs are available now that allow buyers put down as little as 3%. Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket. A USDA loan for example (which is available in certain outlying suburbs like Gardner, Desoto, and Bonner Springs) is a 0% down payment loan if you meet certain income requirements.
Myth #2: “I Need a 750 FICO® Score or Higher to Buy” The survey 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 750 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, 53.2% 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 process of getting qualified for a mortgage much easier. Your dream home may already be within your reach!!!
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