Study: 'Knowledge Gaps' May Be Thwarting Buyers
Potential homebuyers often are not aware of down payment requirements, a Fannie Mae study found. Others don’t understand essentials like credit scores.
WASHINGTON – According to the recent Fannie Mae Mortgage Understanding Study, which surveyed 3,338 household financial decision makers, 92% say owning a home is important and 74% plan to buy, rather than rent, the next time they move.
However, nine out of 10 respondents overstated or were unaware of what most mortgages require for a minimum down payment. Others expressed confusion about underwriting criteria, such as maximum debt-to-income ratios and minimum credit scores.
Seventy-eight percent of respondents also said it is a bad time to buy a home with high mortgage rates cited as the main reason. Thirty-five percent cited high home prices as their largest concern, down from 57% in 2018, the last time Fannie Mae conducted the survey.
Fannie Mae said, "We think these survey findings have important implications for the entire mortgage industry – and serve as a call to action to help bridge consumer knowledge gaps through education and outreach."
Just 26% of respondents said they planned to be renters the next time they move, but nearly 50% of respondents currently renting plan to buy a home. Of the quarter of respondents actively planning to buy a home in the next few years, more than 75% have never owned a home and 50% are currently renters. About 75% of people planning to buy a home have saved a little for a down payment, but many are unaware if they have enough set aside to buy a home.
Only 24% of respondents know that mortgages backed by Fannie Mae and Freddie Mac allow homebuyers to put as little as 3% down, and the rest thought it was 10% or didn't know.
Source: Inman (07/16/24) Carter, Matt
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