Wednesday, November 9, 2016 / by Vanessa Saunders
The availability of mortgage credit is not at the same level that it was during the boom in housing (2005), and that’s good news. However, the constant headlines which talk about “tight mortgage credit” are causing some potential home buyers to doubt their ability to purchase. We want to rectify the misconception of what is required for a down payment in order to purchase a home in today’s market.
Freddie Mac recently discussed the confusion many first-time home buyers have about the down payment they need in order to buy:
“Did you know that the average down payment among first–time home buyers is 6% and it's 13–14% for repeat buyers…It's possible to put down even less.
Many potential home buyers think that only the FHA helps make mortgage loans with low down payments. Not true.
Freddie Mac's Home Possible mortgage products let qualified home buyers put down as little as 3%.”
Brenda Garcia Lemus of John Burns Real Estate Consulting reports that this is also the case with newly constructed homes:
“Our home-builder clients sell hundreds of homes every weekend to buyers with 5% down payments and below average credit scores. Yet, many middle-income households with average credit and access to a 5% down payment assume they cannot become homeowners because of the ‘tight credit’ headlines.”
Before you ‘disqualify’ yourself, check with a professional in your market to find out what is possible in mortgaging today.