2 Major Myths Holding Back Home Buyers

Urban Institute recently released a report entitled, “Barriers to Accessing Homeownership,” which revealed that “eighty percent of consumers either are unaware of how much lenders require for a down payment or believe all lenders require a down payment above 5 percent.”

Myth #1: “I Need a 20% Down Payment”

Buyers often overestimate the down payment funds needed to qualify for a home loan. According to the same report:

“Consumers are often unaware of the option to take out low-down-payment mortgages. Only 19% of consumers believe lenders would make loans with a down payment of 5% or less… While 15% believe lenders require a 20% down payment, and 30% believe lenders expect a 20% down payment.”

These numbers do not differ much between non-owners and homeowners; 39% of non-owners believe they need more than 20% for a down payment and 30% of homeowners believe they need more than 20% for a down payment.

While many believe that they need at least 20% down to buy their dream home, they do not realize that programs are available that allow them to put down as little as 3%. Many renters may actually be able to enter the housing market sooner than they ever imagined with programs that have emerged allowing less cash out of pocket.

Myth #2: “I Need a 780 FICO® Score or Higher to Buy”

Similar to the down payment, many either don’t know or are misinformed 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 Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans.

As you can see in the chart above, 53.5% of approved mortgages had a credit score of 600-749.

Bottom Line

Whether 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.

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17854 W Illini Street Goodyear, AZ 85338

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2,333 SqFt

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$454,900

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2.5 Baths

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Status Active

MLS # 6641244

Property Type Townhouse

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Charming Townhome located within the Cielito Lindo Subdivision. This is a 2 bedroom/2.5 Bath home with a 2 car garage. 2 master suites, each with a private balcony. There is a south facing patio of the Dining area that provides panoramic views. The location is close to the Historic Art Village of Tubac with restaurants, galleries, shops and the Tubac Historic Park. Baca Float Water Company. Streets are maintained by the HOA as is exterior painting. Furnishings available by SBOS

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3 Beds

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1,567 SqFt

Status Active

MLS # 6692120

Property Type Single Family Residence

Price Type --

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$454,900

3 Beds

2 Baths

1,630 SqFt

Status Active

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Price Type --

Beautiful remodeled home on nice corner lot. Parks, community pool, basketball, and tennis/pickle ball right at the end of the street. Solar panels owned free and clear. Attractive landscaping front and back. Upgraded tile flooring. Newer carpet, interior/exterior paint, granite counters, stainless steel appliances, light and plumbing fixtures. Big island kitchen. Living and family rooms. Split 3rd bedroom has double doors for nice office option. Split master bedroom with large bath, separate tub and shower, large walk in closet, double sinks. Attractive security door in front and front walk tile. HVAC is 2011, water heater 2022. Very nice and move in ready! All figures and measurements are approximate - buyer to verify prior to COE.

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