Down Payments - You DO NOT Need 20%

How America Views Homeownership, which is a recent survey that was conducted, shows that 95% of Americans want to own a home if they don’t already and that 68% feel that now is a solid time to purchase a home.



One of the top people in Wells Fargo home mortgage production, Franklin Codel, says:“Although the home buying process has changed in many ways in recent years, our survey found Americans still view homeownership as an achievement to be proud of and many believe that now is a good time to buy a home.”
Misunderstanding Can Cause Inactivity

Bearing the above info in mind, there was also a large number of people who have fear around the home purchasing process. The reason for this seems to be tied to concerns they have regarding “qualifying for a mortgage or navigating the home buying process”. Something that was fairly interesting is that close to 75% said they are aware of and clear about the process required financially in order to buy a home.

However, the answers they gave in regards to this don’t quite line up. 

• 30% of respondents believe that only individuals with high incomes can obtain a mortgage 
• 64% of respondents believe they must have a “very good” credit score to buy a home 
• 44% believe that a 20% down payment is required 

• Yet, many of these beliefs are not accurate. For instance, let’s look at the facts regarding down payments:

• In a blog post Freddie Mac recently posted, it states the following:

“Did you know 40 percent of today's homebuyers using mortgage financing are making down payments that are less than 10 percent? And how about this: since 2010, the number of people putting down less than 10 percent for conventional loans has grown three fold. So, not only are low down payment options real, they represent a significant portion of today's purchases.”

• In addition, Freddie Mac’s VP and Head of Single-Family Sales & Relationship Management, Christina Boyle, shared the following:

• A person “can get a conforming, conventional mortgage with a down payment of as little as 5 percent (sometimes with as little as 3 percent coming out of their own pockets)”.

• Qualified borrowers can further reduce the down payment coming out of their own pockets to 3 percent by lining up gifts from family, grants or loans from non-profits or public agencies.

Education is the Key

• Another key component in all of this is making sure potential buyers have all the information they need- Boyle says:

“Letting more consumers know how down payments are determined could bring more qualified borrowers off the sidelines. Depending on their credit history and other factors, many borrowers can expect to make a down payment of about 5 or 10 percent.”

• Codel agreed:

“It is important for prospective homebuyers to feel empowered to ask lenders and real estate agents questions about available options, such as down payment assistance or FHA loan programs or VA loans for veterans.”
At the end of the day, make sure to get all the information you can so you can make the best decision possible for your purchase!

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