A recent survey shows that nearly 45% of people polled believe that they need at least a credit score of 780 in order to qualify for a mortgage to buy a home. However, according to American Enterprise Institute’s International Center on Housing Risk, this perception is not the reality of the situation.
From Keeping Current Matters:
- 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 percent
- The median first-time buyer with an agency mortgage made a down payment of only 3 percent, 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.
Stephen Oliner, co-director of AEI’s International Center on Housing Risk explained the reality of the situation.
“One hears all the time that first-time buyers have limited access to mortgage debt. But this isn’t true. Many first-time buyers with low FICO scores and little money down are buying homes every month.”