Two Major Misconceptions About Qualifying For A Mortgage Today

Dated: 04/28/2016

Views: 215

You Do Not Need 20% Down To Buy NOW

Teachers-Pet


A survey by Ipsos found that the American public is still somewhat confused about what is actually necessary to qualify for a home mortgage loan in today’s housing market. The study pointed out two major misconceptions that we want to address today. 


1. 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.


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.



2. 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. In actuality, the average FICO scores of approved conventional and FHA mortgages are much lower.


The average conventional loan closed in March had a credit score of 753, while FHA mortgages closed with a 685 score. The average across all loans closed in March was 722. The graph below shows how the average FICO Score required has come down over the last 12 months and has stayed around 722 for the last six months.


FICO Score Distribution | Simplifying The Market


Bottom Line


If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, sit down with a professional who can help you understand your true options. The Dallas-Fort Worth housing market is one of the hottest in the nation, so being prepared is your best approach. We'd love to pair you with a qualified lender to help you through the process. Contact us today.

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Lisa Birdsong

Top 1% of Texas Real Estate Teams; McSam Realtor of the Year, 2016; Certified Residential Specialist, CRS D Best Realtor, 2016, 2017 Castle Hills Realtor Advisory Board, 2016; Windsong Ranch Real....

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