It may not come as a surprise that the American public is still somewhat confused about what is really necessary to qualify for a home mortgage in today’s market. A common misconception is that you must put down a minimum down payment of 20% of the purchase price. In actuality, there are many loans being written today with a down payment of 5% or less for a fixed rate mortgage. Another common misconception is that a credit score over 780 is required to buy a home. In reality, the average FICO scores of approved conventional and FHA mortgages as reported from the latest Ellie Mae Report are much lower:

Mortgage Graph 12-200001

With regards to mortgage rates, they are at levels unimaginable a generation ago. But for many would-be home buyers, a low-rate loan had been out of reach denied by lenders still cautious about the housing bust. However, that finally began to lessen in 2015. Due to rising home prices, less stringent down payment requirements and new rules that limit lenders liability when loans that meet certain criteria go bad, borrowers are encountering fewer obstacles when seeking a mortgage. As a result, this has opened the door to those buyers who have been previously shut out of the market providing more options for all buyers.

To qualify for a mortgage in today’s market, lenders will generally require the following:

Whether you are buying your first home or trading up, it is important to note that the stronger your qualifications, the lower the interest rate that you will be able to secure. Borrowers with a credit score of 740 or more and a down payment of at least 25% will get the best rates. Borrowers who want to secure the best rates should do the following:

 Since interest rates will likely to continue to gradually rise through 2016, prospective buyers who are interested but unsure whether they are qualified should meet with a professional Realtor to review their options.

 If you are not currently working with a Realtor and have an interest in either buying or selling a property in South Florida, please  don’t hesitate to contact me directly at (954) 547-9483 or at