Mortgage Myths – Fannie Mae’s study revealed that Americans are misinformed about what is required to qualify for a mortgage when purchasing a home. ¹
Fannie Mae Key Survey Findings
- There is a significant lack of understanding about minimum mortgage qualification criteria not only among consumers in general but, more importantly, among renters who plan to purchase a home within the next five years.
- Lenders are cited by consumers as the most influential source of mortgage advice, suggesting the value of working closely with lenders to improve consumers’ knowledge of qualification criteria.
Myth #1: “I Need a 20% Down Payment”
Fannie Mae’s survey revealed that consumers overestimate the down payment funds 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 that they need at least 20% down to buy their dream home. New 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.
As you can see, 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 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.
To help debunk this myth, let’s take a look at the latest Ellie Mae Origination Insight Report, which focuses on recently closed (approved) loans. As you can see below, 54.1% of approved mortgages had a credit score of 600-749.
Whether buying your first home or moving up to your dream home, knowing your options will definitely make the mortgage process easier. Your dream home may already be within your reach.
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Note 1: “What do consumers know about the Mortgage Qualification Criteria?