April is Financial Literacy Month and here at Heritage Grove Federal Credit Union, that is our favorite month of the year. Homeownership is still a mystery for many, so without further ado here are the myths and the facts about buying a home.

Myth# 1: You have to put 20% down to buy your first home.

This hasn’t been true since 2014, when Fannie Mae introduced their 3% My Community Mortgage program. Government backed mortgages for zero percent down have been offered since the 1940s.

Currently, Fannie Mae’s first-time buyer and HomeReady programs only require 3%, and FHA loans require 3.5%. It is possible to finance through VA or USDA with zero down. These loans still have closing costs.

Myth# 2: Buying is cheaper than renting.

Sometimes. Sometimes not.

Currently, the average rent for a two-bedroom apartment in Oregon is $1,267 ($900 – $2,200 depending on the city you live in). For a two-bedroom home the average (principal and interest only) mortgage payment is $2,453. It is very important to be aware of the costs of homeownership before committing yourself.

Myth #3: Having “bad” or thin credit is an immediate disqualification.

TheFederal Housing Authority offers mortgages that are designed for borrowers with low credit scores. Thin credit, defined as having little or no credit history, isn’t an insurmountable obstacle.

The HomeReady program allows for several scenarios for qualifying a buyer with thin or non-traditional credit.  It is best to establish credit and work on your score and your overall history in anticipation of buying a home.

Utilize our free Credit Score Solution through digital banking to help monitor your credit score, manage your budget, and map out your goals.

Myth #4: I need to be a U.S. Citizen to buy a home.

No. Many lenders will work with borrowers who are not currently U.S. citizens. Fannie Mae and Freddie Mac, the government sponsored enterprises that secure most mortgages in the U.S., will purchase mortgages made to lawful permanent and non-permanent resident aliens. If you do not have a Social Security card, you must have an ITIN and be able to provide proof of legal residency with a Green Card, visa, or other legal residency documentation. You may also need to produce an ITIN letter.

Myth #5: Down payment assistance programs are hard to qualify for.

There are many different programs available and several organizations in the area that can help you. DevNW’s mission is to provide housing assistance and financial counseling in the Willamette Valley for over forty years.

For those following the path to homeownership they provide education, one on one counseling, matching funds savings accounts, and both grants and forgivable second mortgages towards down payments and closing costs. In the past they distributed funding for U.S. Veterans (up to $30,000!) and assisted first-time and first-generation homeowners with grants of up to $125,000.  

Don’t miss out on resources that can make it possible to buy a home. Find a housing counselor in your area.

Buying a home can be complicated and nerve-wracking but Heritage Grove is here to help! Call/text us at 503.588.0211 or email mortgage@ourgrovecu.com to get answers to your questions.

Written by Elena Christian