Though affordability has been the largest obstacle for renters seeking to be homeowners here in Southern California, we shockingly discovered that 14 percent of renters actually can afford to buy a home they just lack the financial knowledge to do so. According to the California Association of Realtors, of the 6 million California renters, 826,000 could qualify to purchase a median-priced home within the counties they reside in.
Unfortunately, a lack of financial literacy has been their greatest barrier to entry. In a poll, nearly 75 percent of renters believe a down payment must be a minimum of 20 percent. They are entirely unaware of the fact that other mortgage programs exist in which they can put as little as 3 percent down. 69 percent of renters said they would buy if they could put less than 20 percent down.
These numbers are astonishing! Yes, affordability has caused the American Dream to fizzle for many, but it’s not entirely dead. Nearly 70 percent of renters in California still want the pride of homeownership and the sad part is, they don’t even know that it is attainable. Over 800,000 renters make enough income and have good enough credit to qualify for a mortgage with a lower down payment, but because of their misconceptions of what it takes to buy a home, they have not even looked into it.
Prospective first-time buyers should be aware that there are many different loan options out there, many of which allow for far-less than 20 percent down and some even offer down payment assistance. If you’re currently renting and unsure if you qualify, step one is to contact a trusted agent who can connect you with a reliable mortgage broker. They will shop different loans for you to find you the most suitable program that meets your needs and down payment abilities.