2 Myths Holding Back Home Buyers

    2 Myths Holding Back Home Buyers | MyKCM

    Urban Institute recently released a report entitled, “Barriers to Accessing Homeownership: Down Payment, Credit, and Affordability,” which revealed that,

    “Consumers often think they need to put more money down to purchase a home than is actually required. In a 2017 survey, 68% of renters cited saving for a down payment as an obstacle to homeownership. Thirty-nine percent of renters believe that more than 20% is needed for a down payment and many renters are unaware of low–down payment programs.”

    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:

    “Most potential homebuyers are largely unaware that there are low-down payment and no-down payment assistance programs available at the local, state, and federal levels to help eligible borrowers secure an affordable down payment.”  

    These numbers do not differ much between non-owners and homeowners. For example, “30% of homeowners and 39% of renters believe that you need more than 20 percent for a down payment.”

    While many believe that they need at least 20% down to buy their dream homes, they do not realize that there are programs available which 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.

     

    List of Downpayment Options

    • Florida Assist – $7500 repayable 2nd mortgage, 640 credit score minimum, paid back once ownership transfers, must be a First Time Home Buyer, Income limits apply.
    • Florida HLP – $10,000 repayable 2nd mortgage (monthly payments at 3% for 15 years), must be a First Time Home Buyer, Income limits apply.
    • Florida Grants – 4% (FHA & VA), 3% or 4% grant (conventional financing), non-repayable, 640 credit score, must be a First Time Home Buyer, Income limits apply.
    • FHA DPA Advantage – 2% non-repayable grant, FHA only, applicable to First Time Home Buyers, Community Heros, or below 140% of median income.

    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.

    2 Myths Holding Back Home Buyers | MyKCM

    As you can see in the chart above, 51.7% 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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    6 Responses to “2 Myths Holding Back Home Buyers”

    • Roseanne Alwell

      Written on

      Looking to get a mortgage. I guess you can say we are renting to buy. Been here for year and half

      Reply
      • Jose Mejia

        Written on

        Hi Roseanne! Thanks for reaching out! We will reach out to you shortly to hear more!

        Reply
    • April Sheffield

      Written on

      Can i buy in the price range and the amount i feel comfortable to pay without a STRUGGLE. $1000-$1400 a month.

      Reply
      • Jose Mejia

        Written on

        Hi April! It’s highly possible to find yourself in the payment range. Much of it will also depend on what your needs will be from a home that you are looking to buy and the area you are looking to buy in. You payment range as of today’s market appears to be somewhere between $130,000 to $190,000. I invite you to fill out the form on our site so we can learn more about your circumstance.

        Reply

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