A survey by Ipsos found Americans are is still somewhat confused about home mortgage loan qualifications in today’s housing market. There are two major misconceptions:
1. Down Payment
The survey revealed consumers overestimate the down payment needed to qualify for a home loan. According to the report, 40% of consumers think a 20% down payment is always required. In actuality, many loans are completed with a down payment of 3% or less.
The survey also revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the average FICO® scores of approved conventional and FHA mortgages are much lower.
The average conventional loan closed in February 2017 had a credit score of 752, while FHA mortgages closed with a score of 686. The average across all loans closed in February 2017 was 720.
If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, let’s sit down to help you understand your true options.