Mortgage Confidential: You Don't Need 20% Down to Buy a House


Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

This is bugging me. I hear it over and over again from talking heads on t.v., "You've got to have 20% down and perfect credit in order to get a mortgage," or a host asking "But you know, who's lending money these days anyway?" and other such drivel. I'm not going to name names but this was a show on Fox with a famous show host asking their famous business analyst and both talking stupid and keeping potential home buyers on the sidelines.

"Well, hon, I guess we can't buy a house after all. Our credit scores are only 700 and we just have 10% down."

Let me repeat this here: You DO NOT have to have an 800 credit score and 20% down to get a mortgage! To save ink, please re-read the previous sentence for emphasis. And lenders ARE making mortgage loans...every single day. It's just that they're not making the goofy loans they used to make the put so many lenders out of business.

Conventional loans via Fannie Mae do require a minimum credit score of 680 if you have less than 5% to put down. FHA doesn't have a minimum credit score although most lenders won't issue an FHA loan with a credit score below 500 regardless of any automated approval. And hey, last time I looked VA still has the best deal on the block with zero down, relaxed credit and loan limits up to $417,000.

Real estate finance expert David Reedis president of CD REED Mortgage Bankers in Austin, TX and author of Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You and Mortgages 101: Quick Answers to over 250 Critical Questions About Your Home Loan.