Myth #1: “I need 20% of the home purchase price.”
Buyers tend to overestimate the amount of money they need for the down payment. According to the recent Urban Institute report:
“Most potential homebuyers are largely unaware that there are low-down payment and no-down payment assistance programs available at the local, state, and federal levels to help eligible borrowers secure an affordable down payment.”
The number of people, both homeowners and renters alike, believe the same myth. From the same report: “30% of homeowners and 39% of renters believe that you need more than 20 percent for a down payment.”
Many do not know that there are programs in place to assist in purchasing a home where nowhere near 20% down is required.
These programs allow potential homebuyers to put as little as 3% down on a home to qualify for a home loan. Many renters are capable of purchasing a home and could enter the housing market sooner than expected with these programs that require less out of pocket expenses!
Myth #2: “I need a 780 FICO® score or higher to buy a home.”
Many consumers believe that a “good” credit score is 780 or higher and that is the kind of score they need to purchase a home.
Below is Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans.
As depicted in the graph above, over 50% of approved mortgage loans had credit scores of between 600 and 749.
Summary: You do not need perfect credit or 20% down to realize your dream of being a homeowner! Your dream home may be more within reach than you originally thought.