A recent survey by Ipsos found that there is still much confustion with the public about what is necessary to qualify for a mortgage and buy a home. Two of the major misconceptions are surrounding the down payment and FICO score that is necessary, and today I will address those:
1. Down Payment
The 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.
Here are the results from a Digital Risk survey done on Millennials:
2. FICO Scores
The Ipsos 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.
Here are the numbers from a recent Ellie Mae report:
If you are a prospective purchaser who is ‘ready’ and ‘willing’ to buy but not sure if you are also ‘able’, sit down with someone who can help you understand your true options.