Fannie Maeâs article, âWhat Consumers (Donât) Know About Mortgage Qualification Criteria,â revealed that âonly 5 to 16 percent of respondents know the correct ranges for key mortgage qualification criteria.â
Myth #1: âI Need a 20% Down Paymentâ
Fannie Maeâs survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 76% of Americans either donât 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, but many 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.
âAs 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: âI need a 780 FICO Score or Higher to Buyâ
The survey revealed that 59% of Americans either donât know (54%) or are misinformed (5%) about what FICO score is necessary to qualify. Many Americans believe a âgoodâ credit score is 780 or higher. To help debunk this myth, letâs take a look at Ellie Maeâs latest Origination Insight Report, which focuses on recently closed (approved) loans. As you can see below, 54.7% of approved mortgages had a credit score of 600-749.
âWhether buying your first home or moving up to your dream home, knowing your options will make the mortgage process easier. Your dream home may already be within your reach.