You Don’t Need 20 Percent Down to Buy a Home

A survey by Ipsos found that the American public is still somewhat confused about the types of requirements to obtain a mortgage loan in today’s housing market. The study pointed out two major misconceptions that we want to address today.

DOWN PAYMENT

The survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 36% think a 20% down payment is always required. In actuality, there are many loans written with a down payment of 3% or less and the number has increased through the first quarter of the year as shown by the graph below:

FICO SCORES

The survey also reported that two-thirds of the respondents believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780. The truth is that the average FICO scores of approved conventional and FHA mortgages are much lower:

The bottom line is this: If you want to buy a home and you are ‘ready’ and ‘willing’ to buy but not sure if you are also ‘able’, sit down with someone who can help you understand your true options. To that end, feel free to contact the agents at Broadpoint Properties.