Creating Opportunity Through Education
While the housing market has become increasingly unaffordable, many homebuyers may have more buying power than they believe. There are many misperceptions about mortgage requirements and process that are still circulating and can be alleviated by a renewed focus on education.
How Borrower Education Can Make Housing
Today’s U.S. housing market is leaving many consumers priced out. Homes, on average, have become less affordable, and the ones that are affordable are in short supply. The lack of supply is creating affordability pressures that have forced many families to rethink their finances. As a result, 55% of future homebuyers believe that homeownership is out of reach for them financially.
However, while affordability and supply constraints have weighed on many prospective homebuyers, homeownership education has the power to help people prepare for the homebuying process and successful homeownership. And, as an industry, we have an opportunity to dispel mortgage qualification misconceptions that prospective homebuyers have about their ability to obtain a mortgage and, at the same time, educate the housing industry about ways to better meet their needs.
of future homebuyers said they are unaware of lower down payment mortgage options
In a recent Fannie Mae study, future homebuyers were asked to demonstrate their knowledge of the mortgage process and the affordable options available. Among respondents, 73% were unaware of lower down payment options that range from 3% to 5% of a home’s purchase price. This is an important realization, considering that 31% cited not being able to come up with a down payment as one of the key challenges holding them back from homeownership. These findings align with a 2018 nationally representative, online Fannie Mae survey in which many of the 3,000 respondents overestimated the minimum credit score and down payment necessary to qualify for a mortgage and remained unfamiliar with low down payment programs.
We can all play a role in ensuring that prospective homebuyers can achieve sustainable homeownership.
The obstacles to homeownership are very real for many people. However, education is a powerful tool in helping prospective homebuyers better understand their buying power, know what options are available to them, and prepare for sustainable homeownership. To do our part, we are committed to sharing our data and insights with the industry, learning from others, and continuing to work to advance understanding of what homebuyers and homeowners need and want. Fannie Mae, along with lenders, real estate professionals, housing counselors, and others can all play a role in ensuring that prospective homebuyers can achieve sustainable homeownership.
Together, let’s make housing more affordable for all. Share this article and help spread the word.
Fannie Mae, "Future Homebuyers," Single-Family Strategy & Insights unpublished research (November 2019). | Fannie Mae, "Manufactured Housing," Single-Family Strategy & Insights unpublished research (December 2019). | Fannie Mae, "Builders," Single-Family Strategy & Insights unpublished research (December 2019). | Fannie Mae, "Consumers Continue to Overestimate Mortgage Requirements," Economic and Strategic Research (June 2019). | Hickey, "2019 State of the Nation's Housing Report: Lack of Affordable Housing," Habitat For Humanity (2019).