Do Not Let Mortgage Misinformation Stand In Your Way To Homeownersip

Do Not Let Mortgage Misinformation Stand In Your Way To Homeownersip

Don't let a lack of knowledge or misinformation keep your family from buying a home this year. Meet with a local real estate professional who can evaluate your ability to buy now!

Down Payment

Perceptions

Many renters have mentioned that the lack of an adequate down payment is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:

  • 40% of all renters don’t know what down payment is required

  • 15% think you need at least 20% down

  • An additional 4% think you need at least 10% down

The Reality

There are programs offered by Fannie Mae, Freddie Mac and FHA that require as little as 3-3.5% down. VA and USDA loans offer 0% down programs. According to the National Association of Realtors, the typical down payment for a first time buyer is 6%.

Credit Score

Perceptions

Many renters have mentioned that the lack of an adequate credit score is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:

  • 54% of all renters don’t know what credit score is required

  • 5% think you need at least a 740 credit score

The Reality

Many mortgages are granted to purchasers with a credit score of less than 700. According to Ellie Mae, the average credit score on a closed FHA purchase is 687 and the average credit score on all loans is 722.

Back End Debt-to-Income Ratio (DTI)

Perceptions

Many renters have mentioned that they carry too much debt which is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:

  • 59% of all renters don’t know what DTI is acceptable

  • 25% think you need at under 25%

  • 7% think you need under 39%

The Reality

Lenders like to see a back-end ratio that does not exceed 36%. Fannie Mae’s maximum total DTI ratio is 36% of the borrower’s stable monthly income. The maximum can be exceeded up to 45% based on credit score and other requirements.


Chris Baggio Headshot
Author:
Phone: 201-388-0768
Dated: January 12th 2016
Views: 798
About Chris: Born and raised in Long Island, NY and moved to New Jersey 23 years ago, the past 17 in Morris Count...

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44 Whippany Road
Morristown, NJ
973-975-0003
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