Renters and first-time homebuyers: Do you know what it takes to get a mortgage so you could buy a home instead of giving your money to the landlord every month?
No, you don’t.
At least that’s the conclusion of researchers for Fannie Mae, who discovered in a recent survey that many people who don’t own homes are way off what they think they have to have or do to get a home loan.
Off about credit score and down payment
The assumption of more than half of them is that it requires a credit score north of 650 to qualify for a loan. But many lenders will work out a mortgage for buyers well under that.
Four in 10 of those surveyed had no idea how much a a down payment is required. And the ones who offered a guess said you had to come up with 10% minimum of a down payment to get into a house. But a lot of loans are closer to 3%, and veterans can get into a home for nothing down.
“Buyers who qualify also can get a zero-down loan, although they do have to qualify,” said Tommy Allums, VP of mortgage lending for Guaranteed Rate, a lender in Las Vegas.
“We run into people all the time who may be not that far away from being eligible,” Allums said. “That’s why — even if you think you’re wouldn’t qualify — you should talk to a professional and find out what you need to do. You may be there already.”
Don’t know about down payment help available
Nevada has several programs to help buyers come up with a down payment, most notably the Home Is Possible Nevada. It has targeted programs for teachers and military/veterans but also for the general public.
There are some requirements, but they aren’t onerous. You have to take a short class on homeownership, and there is a income limit, but it’s about $100,000 (the numbers can change).
Get the real scoop
The potential buyers also didn’t have much of an idea about what debt-to-income ratio lenders required, and many of those who gave an answer were wrong.
What this should tell you, renters who want to be homeowners, is that you should get some real information from a Realtor or other professionals who work in real estate and mortgage lending every day to see where you stand. You may be a lot closer to home ownership than you think.