Get the Facts on Homeownership 

Separating Fact From Fiction in the 

Homebuying Process 

Brought to you by 
 

Get the Facts on Homeownership 

These days, information about homeownership seems to change frequently, 

causing many could-be homeowners to wonder if now is a good time to 

consider a home purchase. For many, it’s tough to determine what the facts 

are, versus the many myths and misconceptions about homeownership. 

You could find that homeownership is much closer than you think. 

1. Myth: It’s a bad time to buy a home and I’m 

afraid I’ll end up in foreclosure. 

For working families with stable incomes and good 

credit, this is a time of opportunity. 

The 30-year fixed-rate mortgage, the mainstay of America’s home finance system, provides stable payments 

and long-term savings for homebuyers. Now may be a 

good time for you to consider homeownership, particularly if mortgage interest rates are at attractive levels and 

there’s a large housing supply in your area. 

The idea of foreclosure is understandably frightening. While you can’t always solve for the unexpected 

changes in your life (job loss, divorce, illness), good 

planning and preparation in addition to responsible use 

of credit can decrease the likelihood of foreclosure. 

2. Myth: I need almost perfect credit to buy a 

home, but I can’t do anything to improve my 

credit rating. 

It is true that getting a mortgage today requires a 

stronger credit history than in past years. You do not 

need perfect credit, but the higher your score, the more 

options you have when looking for a mortgage. Your 

credit score will affect your mortgage loan approval and 

interest rate. 

If you have a handle on your finances, it’s possible to 

take measures to improve your credit: 

 Always pay your bills on time. 

 Pay at least the minimum amount required. 

 Review your credit report and correct any errors you 

may find. 

 Keep your debt-to-income ratio below 20 percent 

(excluding housing costs). 

 Don’t max out on your credit cards. 

3. Myth: I can’t get a mortgage if I’ve changed 

jobs several times in the last few years or if I’m 

self-employed. 

You can change jobs several times or be self-employed 

and still get a mortgage loan to buy a home. The 

important thing is to show that you’ve had a stable 

income and good credit. 

Most lenders would like to see you working for two 

years in the same field with steady or increasing 

income. If you have not worked at your current job for 

at least two years, or if you have multiple jobs, you will 

need to provide information on all jobs going back until 

you have a two-year history. 

If you’re self-employed and don’t have a steady income 

to prove to lenders your ability to make the necessary 

payments, be prepared to provide documentation as 

proof of your income, including tax returns for at least 

the last two tax years, profit and loss statements, 

details of your investments, etc. 

4. Myth: Homeownership is too expensive and I 

don’t have the 20 percent down payment needed 

to get a mortgage. 

There are many expenses to consider when buying a 

home – including your down payment, closing costs, 

property taxes, maintenance costs, etc. 

A 20 percent down payment is not the golden rule. You 

should expect to make a minimum of 3 percent for your 

down payment and more typically between 5 and 10 

percent for your down payment. (Note that you may be 

required to pay private mortgage insurance if you make 

a down payment of less than 20 percent.). 

Many factors come into play in determining the amount 

of down payment that will be required, depending upon 

your individual situation: 

 The value of the property 

 The amount you are financing 

 Your credit rating 

 Your debt-to-income ratio 

To supplement whatever down payment you have, ask 

about potential sources of down payment or closing 
cost assistance if you are a first-time homebuyer or a 


household of modest means.
 

Owning a home has both personal and financial 


advantages:
 

 Tax benefits

 Stable payments with a fixed-rate mortgage

 Potential for appreciation

5. Myth: The mortgage process is too complicated

and risky. 

With the right resources and information, the process of 

buying a home and obtaining a mortgage can be easier 

to understand. Seek an experienced housing counseling professional, loan officer, or real estate agent to walk 

you through your options. 

Follow these steps as you begin the process of buying 

a home: 

 Start by determining how much you can afford based

upon your spending plan and comfort level.

 Talk to a loan officer, who will review your income,

expenses, and savings to help you determine the

type and amount of mortgage loan you qualify for.

 Seek assistance from a credible housing or credit

counselor to obtain information on how to establish or

improve your credit history.

Follow these helpful tips to protect yourself against
 

organizations that don’t have your best interests in mind:
 

 Say no to “easy money.”

 Ask about additional fees.

 Understand the total package.

 Shop around.

 Find out about prepayment penalties.

 Work with HUD-certified credit counselors.

 Make sure documents are correct and complete.

 Make sure all promises and terms are in writing.

 If you’re not sure, don’t sign!

Homeownership Could be Closer 

Than You Think 

 Complete the Get the Facts on Homeownership

workshop

 Find a HUD-approved counseling agency in your area

at http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

 Determine if you qualify for homeownership

 Attend a CreditSmart® workshop or homebuyer

education class

 Meet with a mortgage lender or real estate

professional.

For More Information 

 Free, online CreditSmart tutorial helps you learn how

to achieve your financial and homeownership goals.

Available in English and Spanish @ http://www.freddiemac.com/creditsmart/consumer_training.html.

 My Home by Freddie MacSM, an online, one-stop

resource on topics that include the ins and outs of

homebuying, homeownership, renting, and more.

Visit http://myhome.freddiemac.com/.

 To find a HUD-approved housing counseling agency

near you, visit http://www.hud.gov/offices/hsg/sfh/ 

hcc/hcs.cfm or call 800-569-4287.

 Through our on-the-ground Freddie Mac Borrower

Help Centers and national Network, we work with

trusted national nonprofit intermediaries to support

Freddie Mac’s ongoing commitment of preparing

prospective buyers for responsible homeownership

and helping struggling borrowers with Freddie Macowned mortgages avoid foreclosure. Visit http:// 

www.freddiemac.com/singlefamily/housingpros/ 

help_centers.html for more information and a direc

tory of Borrower Help Center/Network locations.

­

Source 

Content adapted from the following: 

 Get the Facts on Homeownership, a set of tools that facilitate an interactive workshop to dispel common myths about homeownership

and foreclosure.

 Freddie Mac’s award-winning CreditSmart, a multilingual financial education curriculum designed to help consumers build and maintain

better credit, make sound financial decisions, and understand the steps to sustainable homeownership.

 My Home by Freddie MacSM, an online, one-stop resource to help consumers become smart homebuyers, homeowners, and renters.

Visit http://myhome.freddiemac.com/
Brought to you by 

Publication Number 822 n © Freddie Mac, December 2016