Again… You Do Not Need 20% Down Payment to Buy Now!

Again… You Do Not Need 20% Down Payment to Buy Now!

A survey by Ipsos found that the American home buyers are still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. There are two major misconceptions that I would like to address today: Down Payment and FICO® Scores.

1. Down Payment

The survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 40% of real estate buyers think a 20% down payment is always required. In actuality, there are many loans written with a down payment of 3% or less. For example, if you are a first time home buyer, with Federal Housing Administration or FHA loan, your down payment can be as low as 3.5% of the purchase price.

Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.

Also Read:

What is PMI? Get All the Facts Today.

2. FICO® Scores 

The survey also revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the average FICO® scores of approved conventional and FHA mortgages are much lower.

The average conventional loan closed in February had a credit score of 752, while FHA mortgages closed with a score of 686. The average across all loans closed in February was 720. The chart below shows the distribution of FICO® Scores for all loans approved in February.


In addition, to help make purchasing a home more affordable, The Virginia Housing Development Authority or VHDA, has rolled out a new Mortgage Credit Certificate program that gives Virginia’s qualified home buyers another option.


  • Be first-time buyers (waived in federally-targeted areas), or not have owned a home as a primary residence in the past three years.
  • Have income at or below VHDA’s maximum household income limit for the area.
  • Purchase a home below VHDA’s maximum sales price.
  • Use the home as their principal residence.


  • Credit is equal to 20 percent of the annual mortgage interest paid. Remaining  80 percent remains an eligible itemized deduction.
  • MCC is effective for the life of the mortgage, as long as the borrower continues to live in the home.
  • Borrower must have a federal tax liability. This is not a “refundable” tax credit. However, unused credit may be carried forward for up to three years.
  • Does not apply to state income tax.
  • MCC borrowers who sell their home in the first nine years of homeownership may be subject to federal recapture tax.

For the latest information, program updates and a list of participating lenders, check out

Bottom Line

If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, let’s sit down to help you understand your true options. Ready to talk? Schedule buyer consultation here.

And please, don’t forget to download

My Buyers’ Guide:

“Things to Consider When Buying a Home”

As a home buyer, there’s plenty you need to know. You’re about to make the largest financial investment of your life, but with my Home Buyers Guide, you’ll have the information you need about buying a home, right at your fingertips.

Here’s what you will find inside:

  • The Cost of Renting vs Buying
  • 2 Myths That Might be Holding You from Buying
  • Why Pre-Approval Should be Your First Step
  • What You Need to Know About Mortgage Process
  • What to Expect When Home Inspecting
  • And More!

The best part is, our Guide is free and available to download right now. All we need is your name and email, and we’ll send it directly to you.