The elusive and seemingly unattainable 20% down payment for a home restricts potential first-time homebuyers from jumping into the market, according to a recent survey of mortgage industry executives by Genworth Mortgage Insurance.
However, while the fact might not be too surprising, it is interesting to note that even the borrowers who understood a 20% down payment is not mandatory to purchase a home still thought it would be difficult to get into a house with less.
The survey of 150 mortgage professionals was conducted at the 2017 Mortgage Bankers Association Secondary Market Conference recently held in New York City and echoed recent concerns in the market about first-time homebuyer misconceptions.
The survey found that 28% of respondents said consumers still mistakenly believe that a 20% down payment is a requirement for purchasing a home. Then, an additional 41% of industry executives surveyed believed that even among prospective borrowers who understand a 20% down payment is not mandatory to purchase a home believe it would be difficult to get into a house with less.
Beyond misconceptions around the down payment, 39% of mortgage industry professionals believe that consumers’ lack of knowledge about the homebuying process is one of the greatest impediments to first-time homebuyer demand.
Following closely behind was lack of inventory (28%) and excess student debt (27%). Rising interest rates came in at 6%.
“While first-time homebuyers continue to drive the purchase market, we believe many are being kept on the sidelines due to the misconception that a 20% down payment is required to secure a mortgage,” said Rohit Gupta, CEO of Genworth Mortgage Insurance. “There are various low down payment options available today that allow prospective homebuyers to reach their dreams of homeownership sooner. It is crucial that, as an industry, we proactively educate eligible borrowers about solutions that will enable them to buy a home when they’re ready.”
“The more we can work together to educate consumers, the better the opportunity for us to put qualified borrowers into homes and fulfill homeownership aspirations."