You Do Not Need 20 Down To Buy NOW

Dated: 06/27/2016

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One More Time… You Do Not Need 20% Down To Buy NOW



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


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.

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


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, theaverage FICO scores of approved conventional and FHA mortgages are much lower.


The 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.


Bottom Line


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 true options.

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Julie Baldino - Owner-Managing Broker

Julie Baldino is a seasoned veteran of the Pacific Northwest real estate industry, and has consistently been in the top 10% in sales for over a decade in 2 states. In order to accommodate a rapidly ex....

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