Confused about what’s actually required to qualify for a home mortgage loan in today’s housing market?
To start with, here’s 2 important items that should be addressed:
Mortgage Down Payment
A survey sponsored by Wells Fargo, How America Views Homeownership, revealed that 40% of consumers believe a 20% down payment is always required. It’s actually NOT true! Prospective homeowners have many choices. In fact, there are several loans written with 3% or LESS down.
Many newer loan programs now available require less out-of-pocket cash up front, thus offering renters and first-time home buyers alike the opportunity to enter the housing market sooner than they anticipated. Great news!
62% of survey participants believe they need to have a “very good credit score” to purchase a home, along with 43% assuming a good credit score should be over 780. In reality, the average FICO® Scores of approved conventional and FHA mortgage loans are much lower.
The average FICO® Score for February 2017 FHA mortgages closed was 686 with conventional loans, during the same period, having an average score of 752. The total average credit score among all loans closed during February = 720!
This chart indicates the distribution of FICO® Scores for all loans approved in February.
Are you considering home buying today? If you’re ready and willing to move forward today but are unsure because of financing or other issues, contact me today and let’s sit down to weigh your options.