According to a survey of 3,868 consumers by Fannie Mae's Economic & Strategic Research Group, approximately half of the potential borrowers answered "don't know" or failed to provide a valid answer when asked fundamental questions regarding requirements such as payment percentages, borrower's credit scores, and debt-to-income ratios. A large number of respondents thought the requirement for a minimum down payment was 12 percent, four times larger than Fannie Mae's actual 3 percent requirement. Numerous buyers and would-be buyers believed the requirement for a minimum credit score was 652 instead if Fannie Mae's requirement of 620. On a brighter note, the mean response regarding maximum acceptable back-end debt-to-income (DTI) ratio (44 percent) was very close to the actual requirement (generally 45 percent).
JMAC’s top brokers know that building a foundation is important in owning a home. And if their clients have an accurate understanding of the requirements to qualify for a mortgage, it makes things easier for all parties involved. While it can take years to improve one's credit score or save for a down payment, undertaking the effort to reach these goals based on inaccurate information may lead to a needless delay in fulfilling the dream of owning a home.
Our AEs report that consumers may still be relying on old requirements or a skewed version of the current state of mortgage lending requirements. Regardless of the reasons for buyer misinformation, it is obvious that consumers need improved education—and our AEs are there to help their brokers learn about the tools that can help.