A recent study by the National Association of Realtors shows that first time homebuyers currently make up 32% of all home buyers. Compare this number to the historical average of 40%, this is the lowest percent since 1987.

Conversely, a survey by housing giant Fannie Mae found the majority of millennials consider owning a home more sensible then renting for financial and lifestyle reasons. Many young renters appear ready to buy and almost half of those surveyed said their next move will be to purchase a home.

So, where are these first-time homebuyers and what is holding this group back from buying a home?

The Fannie Mae survey gives the most popular reasons in order:

  1. Insufficient credit score/ history
  2. Affording down payment and closing costs
  3. Insufficient Income
  4. Too much debt

Let’s examine these major hurdles perceived by potential homebuyers and real strategies used by mortgage professionals every day to overcome these issues:

Insufficient Credit Scores / History

Most first time home buyers use FHA to finance their home, FHA is lenient on credit requirements and will allow credit scores below 600. A score of 620 or higher is more advantageous for a stronger approval and many of the first-time home buyer programs will require a 640-middle score for down payment assistance. There are also programs that will allow for home financing after significant events like bankruptcy, short sales and foreclosures, just expect to have larger down payment requirements and a higher interest rate.

Affording Down payment and Closing Costs

The HHF program (Florida Hardest Hit Program) provides up to $15,ooo in down payment and closing cost assistance for first time homebuyers in the Tampa Bay area, this amount will usually cover most if not all the expenses for first time home buyers. FHA currently requires a minimum of 3.5% down, VA loans have no down payment requirements.

Insufficient Income / Too much Debt

With the rent payments steadily rising in our area it is often more affordable to buy a home with today’s low interest rates and lock in your payment for the long term. Many programs will allow non-occupying co-borrowers for those whose debt to income ratios are too high.

For more information on any of the programs in this article please contact

Brian McMahon, Mortgage Loan Originator – Team, NMLS #327382

HomeBridge Financial Services, Inc.

5260 State Road 64 East

Bradenton, FL 34208

o: (941) 782-2092, Ext. 427  c: (941) 720-2573  f: (866) 215-2916

e: bmcmahon@homebridge.com

web: www.HomeBridge.com/BrianMcMahon

 

Related Articles

The biggest story in the financial markets and around the globe is the ongoing US/China trade negotiations. At the moment, there is no resolution and it appears there will be no resolution for at least several weeks as the US and China are not expected to talk again until the G-20 Summit…
Read More of the post Trade With China Causes Uncertainty

The Census Bureau recently reported a homeownership rate of 64.2% in the first quarter of 2019, up from the 10-year low of 63.7% in the first quarter of 2015. A recent study by LendingTree shows that 67% of homeowners surveyed aged 22 and older believe that owning a home is…
Read More of the post Americans Favor Owning

"Transitory" — defined as non-permanent or lasting a very short time — is the word Fed Chairman Jerome Powell used this week at the Fed Meeting to describe the current low inflation environment, meaning that inflation will likely pickup from this “temporary” low level. The problem? Inflation has been relatively…
Read More of the post Is Low Inflation Finally “Transitory”?

Good news is typically bad news for bonds and home loan rates. That has not been the trend of late, and certainly not this past week. Durable Goods Orders is a report which shows buying demand for products with a life cycle beyond 4 years — think cars, washing machines…
Read More of the post The US Economy Remains “Durable”