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
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
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.
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.
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