In light of a recent report
from Fannie Mae that revealed many home buyers are harboring three common misperceptions about a mortgage, we’d like to set the record straight.
1. The minimum credit score to get a mortgage is much lower than buyers assume.
Half of those asked were unsure of the minimum credit score needed to qualify for a loan, 14% thought the FICO score needed to be higher than 680, and 32% thought it needed to be higher than 620. The minimum credit score to apply for a conventional home loan with Certainty Home Loans is 620, but we offer home loan products where eligible borrowers can qualify with a much lower FICO score.
While the higher your credit score, the more likely you are to receive a low-interest rate, if housing prices are climbing in your city, as long as you meet the minimum credit score for the type of loan you want, it could be worth purchasing a home now rather than waiting to improve your credit score.
2. Consumers overestimated the required down payment on a mortgage.
Most survey respondents didn’t know how much of a down payment was needed, 13% thought the minimum was 20%, and 1 in 5 thought they needed 6-10%. In reality, the FHA backs loans with a minimum down payment of 3.5%, and there are other programs through the U.S. Department of Agriculture as well as the U.S. Department of Veterans Affairs that offer zero down payment options.
3. Minimum debt levels lenders require.
Consumers can qualify for a mortgage with as much as 50% of their income going toward total debt payments, but 61% of respondents said they didn’t know what the level was and most others said the limit was 40%.
While consumers used to get all their information from their lenders, survey respondents admitted that just 47% used their lender as a primary source for home financing information. Certainty Home Loans has experienced and knowledgeable loan officers in branches across the country. If one is not in your city, you are just an email or phone call away from having all of your home financing questions answered. Contact us today.
Certainty Home Loans offers a fully online mortgage application with regular loan status updates. When you work with us, you get the best of both worlds: personalized service and a digital mortgage experience.
* Certainty Home Loans, LLC is an FHA Approved Lending Institution, and is not acting on behalf of or at the direction of HUD/FHA or the Federal government.
* Mortgage insurance may be required on loans greater than 80% loan to value and will increase your monthly payment.
Jul 30, 2019