Mortgage Myths Debunked: Buying a Home is Just Too Expensive

There are many mortgage myths about down payment requirements, interest rates, credit score expectations, and more. We've previously addressed the myth that renting is cheaper than buying. Especially in today’s economy, another common misconception remains prevalent: Many first-time homebuyers often feel that purchasing a home is too expensive. We invite you to join our experts as we explore these down payment myths and highlight valuable resources designed to enhance your affordability.

Understanding Down Payment Misconceptions

When first-time homebuyers express concerns about a home being too costly, they frequently mention the daunting idea of a 20 percent down payment. While a healthy down payment is beneficial, most buyers don't need to meet this threshold. For example, Forbes Advisor offers insight into average down payments across various states:

While down payments in our markets are around 14 percent, in some cases, first-time homebuyers are only required to provide a minimum of 3 percent down. Several factors influence these requirements, including:

• The type of loan

• Your credit score

• Your debt-to-income ratio

What You Need to Know About Down Payments

If you contribute less than 20 percent down, you are required to pay for private mortgage insurance (PMI). The cost of PMI is added to your monthly mortgage payment to cover the risk that the lender is taking by allowing you to borrow the money.

Increasing Affordability

First-time homebuyers have various resources available to help reduce some of the financial requirements that come with being a prospective homebuyer.

Affordable Financing Options: Lower than Market Rates

• Mortgage Rate Relief

• Government Funding Programs

Downpayment Assistance Programs

• Home$tart

• First Generation Homebuyer Loan Program

• First Generation Homebuyers Community Downpayment Assistance Fund

• Various county/neighborhood options – Check for fund availability

Taking the Next Step is Simple

Consider getting pre-qualified to better understand your affordability. This informal, non-binding process involves chatting with a local Frandsen Bank & Trust mortgage lender who can provide insight into your financial possibilities. Just remember to share accurate information to ensure you get accurate affordability information.