recent survey 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 I want to address today.

1. Down Payment

The survey revealed that buyers 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 and the number has increased through the first quarter of the year as shown by the graph below:

 low down payment

Sure, sellers and listing agents usually consider an offer stronger if there is more money being put down, so it’s the selling agent’s job, (selling agent is another term for buyer’s agent), to make the listing agent know that your offer is a strong one.

2. FICO Scores

 Average 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:

 

Bottom Line

If you are a prospective buyer who is ‘ready’ and ‘willing’ to buy but not sure if you are also ‘able’, sit down with me and I’ll help you understand your true options.