In a recent survey two-thirds of those surveyed believe they need a very good credit score to buy a home, with 45% thinking a “good credit score” is over 780.
Consumers overestimate the down payment funds needed to qualify for a home loan, with 36% thinking a 20% down payment is always required.
However, according to American Enterprise Institute’s International Center on Housing Risk’s May First-Time Buyer Mortgage Risk Index (FBMRI), reality is far from perception. The report reveals:
• 70% of first-time buyer mortgages had a combined loan-to-value ratio of 95% or higher.
• About 20% of first-time buyers taking out mortgages had a FICO score below 660.
• 25% had total debt-to-income ratios above 43%.
• The median first-time buyer with an agency mortgage made a down payment of only 3% or $7200 in dollar terms.
•The median FICO score for first-time buyers with agency mortgages was 705.
• For first-time buyers with FHA-insured loans, the median FICO score was only 672
These numbers contradict the frequent claims that first-time buyers face difficulties in obtaining mortgages.
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