According to Christina Boyle of Freddie Mac, many first time homebuyers believe they won’t have enough money for a down payment. This misperception about needing large down payments is hurting the housing market.
The housing industry needs to do more to let the home buying public know that they can get a conforming, conventional mortgage with a down payment of as little as 5%, even some with as little as 3% down out of their pocket.
In a study by Zelman & Assoc., on average, respondents thought they needed 11-15% or more down payment. Many of these are in their “prime home buying” years. The survey also found that only 28% of respondents felt that they could qualify for a mortgage. This comes to roughly 60-72% of first time buyers who underestimate their ability to qualify.
Between 2009 and 2013 Freddie Macs purchase of mortgages with under 10% down quadrupled. Buyers will, however, need to have mortgage insurance if they put less than 20% down.