We believe homeownership should be within reach for everyone. Yet, myths and misconceptions often stand in the way of borrowers’ dreams. As lenders, you have the power to break down barriers and guide your customers toward successful homeownership. Let’s explore how you can help—armed with facts, empathy, and the right resources.
Understanding today’s borrower
The landscape of first-time homebuyers is evolving. According to the NAR 2024 Profile of Buyers and Sellers, only 24% of buyers are purchasing their first home—the lowest percentage ever reported since 1981. The typical first-time buyer is now 38 years old, with a median income of $97,000. These buyers are diverse, determined, and often navigate complex financial realities.
Next, we dive into the common myths prospective homeowners may believe about the homebuying process. It’s up to us in the industry to educate them and help them mitigate these concerns.
Myth #1: You need perfect credit to buy a home
Credit scores matter, but perfection isn’t required. In fact, one in ten adults has no credit history with the major reporting agencies, and 45 million consumers may be denied access to credit simply because they lack a scorable record.
Average credit scores by loan type:
- Conventional: 738
- Jumbo: 768
- FHA: 673 (Median)
- VA: 692
Every generation sees a boost of at least 50 points in their average credit score when they have a mortgage. Lenders can help borrowers understand their credit, identify opportunities for improvement, and dispel the myth that only those with “perfect” scores can buy a home.
Myth #2: You need a 20% down payment
A persistent myth is that a 20% down payment is required. In reality, 62% of Americans believe this, but it’s simply not true.
- Typical first-time buyers put down 3–5%.
- Saving $400/month, a buyer could save a 3% down payment in just 15 months on a $200,000 purchase.
- 25% of first-time buyers use gifts from family and friends for their down payment.
- 32% say saving for the down payment is the hardest part of the process.
Lenders can educate borrowers about low down payment options and help them explore creative solutions, including down payment assistance (DPA) programs.
Myth #3: Down payment assistance is rare or hard to qualify for
Down payment assistance is more accessible than many realize. There are over 3,000 DPA programs nationwide, offered by federal, state, and local agencies, nonprofits, and even employers.
Types of DPA:
- Grants (do not have to be repaid)
- Forgivable loans
- Deferred-payment loans
- Low-interest loans
DPA is not just for first-time homebuyers, nor is it limited to FHA loans. Many programs are available for repeat buyers and can be layered with conventional or VA loans. Some DPA dollars are even forgiven after a period of homeownership.
Key resources for lenders:
Myth #4: Affordable programs are limited or complicated
Agency affordable programs like Fannie Mae’s HomeReady® and Freddie Mac’s Home Possible® are designed to help low-to moderate-income borrowers. These programs offer:
- Low down payments (as little as 3%)
- Flexible sources of funds (including gifts)
- Waived loan-level price adjustments (LLPAs)
- Reduced mortgage insurance requirements
- Eligibility for repeat buyers and those who own other properties
- Homebuyer education resources
Borrowers do not need to be first-time buyers, and owning other properties does not automatically disqualify them. Lenders can use tools like the HomeReady® Income Eligibility Lookup and Home Possible® Eligibility Map to guide customers.
Myth #5: Renters can't build wealth
Those who rent, and some who choose to rent instead of owning a home outright, can certainly build wealth through other financial strategies than through building home equity. Yet, homeownership remains a powerful wealth-building tool and is possible despite what many first-time buyers may believe. The question, “is it worth it?” might come to mind for those considering homebuying, but these numbers speak for themselves. The median net worth of homeowners far exceeds that of renters—$396,500 vs. $10,400 in 2022. Lenders can help borrowers see the long-term financial benefits of owning a home and provide resources to support them on their journey.
How lenders can help
- Educate and Empower: Share accurate information about credit, down payments, and assistance programs. Use Enact’s Homebuyer Education resources to help borrowers understand their options.
- Personalize Solutions: Every borrower’s situation is unique. Assess their financial needs, savings, and eligibility for affordable programs.
- Connect to Resources: Guide borrowers to DPA programs, agency products, and Enact’s suite of tools—including Rate Express®, Underwriting Guidelines, and training resources.
- Advocate for Access: Help borrowers overcome barriers like high rent, student loans, and credit card debt. Advocate for layered financing and creative solutions.
Dispelling myths is more than correcting misconceptions, it’s all about opening doors. As a lender, you have the opportunity to empower borrowers, guide them through challenges, and celebrate their success. With us by your side, we can help more people achieve the dream of homeownership—one borrower at a time.
Other ways we at Enact can help
We’re committed to providing lenders with actionable insights and responsive support. If you ever need assistance, reach out to your local Enact Regional Underwriter, Sales Representative, or contact our ActionCenter®. They’ll be happy to meet your business needs and point you in the right direction.
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