Buying a house can feel like an unattainable goal. Homes appear to always be getting more expensive, and it can seem like you need perfect credit and thousands of dollars available for closing costs and a down payment to have even a chance of buying a home.
But the complicated reality of buying a house can differ from what people new to the process expect going in, as shown by these surprising real estate facts.
1. You Don’t Have To Pay Closing Costs Upfront
It’s a homebuying fact: One of the biggest financial barriers to homeownership is paying closing costs. These costs include appraisal fees, title insurance, prepaid property taxes, and homeowners insurance, and likely will cost you thousands of dollars.
However, you don’t always have to pay closing costs upfront if you’re getting a mortgage. Many lenders offer no-closing-cost mortgages that wrap those fees into your loan balance. While you won’t need to pay closing costs upfront, expect a higher interest rate on your loan to compensate.
You also can try negotiating with the seller to have them cover some or all of your closing costs. Keep in mind that this is easier in a buyer’s market than in a seller’s market.
If you can’t avoid upfront closing costs entirely, one way to reduce them is to close your loan toward the end of the month.
“If the loan closes midmonth, then the buyer has to pay for the whole month. Paying at the end of the month helps reduce the fee for the next month,” says Dustin Fox, a Fairfax, Virginia-based Realtor and owner of Fox Homes, a real estate search website.
2. You Don’t Need To Put 20% Down
Many buyers may believe that a 20% down payment is required. However, with the average single-family home selling for $440,300 in the second quarter of 2022, a 20% down payment comes to $88,000. Add closing costs, and you’d need about $100,000 on hand before you could buy a home. Most homebuyers would struggle to come up with that much cash, or need to wait years to save up enough money.
The true mortgage fact is that a 20% down payment is nice to have — it lets you avoid the extra expense of private mortgage insurance — but it’s not required.
Loans backed by government agencies like the Federal Housing Administration and Department of Veterans Affairs have lenient down payment requirements for qualified borrowers. FHA loans allow down payments as low as 3.5%, and VA loans have no minimum down payment.
“Not only do FHA and VA loans allow you to purchase a home for much less money down, but the interest rates associated with them are usually significantly lower than conventional mortgages,” says Jordan Fulmer, owner of Momentum Property Solutions, a Huntsville, Alabama-based real estate company. “You are allowed to put down less than 20% with FHA and conventional mortgages, but you will have to pay PMI.”
3. Most People Buy a Home When They’re Older
If you’re young, it’s easy to feel left out when you think all of your peers are buying homes while you’re still renting. But another mortgage fun fact is that it’s more common to buy a home later in life.
The average homeowner is 56 years old, according to 2021 data. For the average first-time homebuyer, statistics peg the average age at 46. Fewer than 40% of people under the age of 35 own a home, and slightly more than 60% of 35- to 40-year-olds are homeowners.
4. You Don’t Need Stellar Credit
The average credit score in the U.S. is 714. That means most people meet the minimum credit score requirement for one of these common types of mortgages:
- Conforming conventional loans require a credit score of 620 to qualify.
- Nonconforming conventional mortgages — aka jumbo loans — have no set minimum credit score. However, since these loans are for large amounts, lenders will set their own standards and usually want to see a credit score of 680 or higher.
- FHA loans have a minimum credit score requirement of 500 with a down payment of at least 10%, or 580 with 3% down.
- VA and USDA loans have no minimum credit score.
5. Less Than Two-Thirds of Americans Own a Home
Depending on your age and perspective, it might seem like either everyone is stuck renting and struggling to buy a home, or that everyone already owns a house.
Fun mortgage fact: The U.S. homeownership rate was 65.5% in 2021. That’s lower than the peak of 69% in 2004, but roughly in line with the average homeownership rate since 1986.
6. Most Homebuyers Use a Real Estate Agent
There’s no hiding that buying a home is complicated. It’s just one of many facts about buying a house. That’s why 87% of homeowners used a real estate agent to help them locate a home, negotiate, and complete the purchase.
A good real estate agent can be invaluable when it comes to buying a home, especially for first-time homebuyers. Real estate agents are experts who can help you save time and money with their knowledge of the area and access to professional resources.
While you might be tempted to shop for a home without an agent to save money, most people find an agent’s expertise is worth the cost.
7. You Can Buy a Home With No Credit
If you have no credit, it’s still possible to get a mortgage and buy a home, but it will be more difficult.
One way to qualify without credit is to find a lender that uses manual mortgage underwriting. That means a human, not a computer program, evaluates your application. You’ll need to show that you can handle the monthly payment by providing employment documentation, prove that you’ve paid other bills — especially rent — on time, and document assets such as savings accounts and investments.
If you need this type of underwriting, look first to smaller lenders like credit unions and local banks.
8. A 6% Interest Rate Is Lower Than Average Historically
If you’re into mortgage trivia facts, you might know that the average 30-year mortgage interest rate since 1971 is about 7.75%.Though the record-low rates in recent years gave way to increases in 2022, current interest rates remain average to below average compared with historical rates.
9. Remote Work Has Had a Minor Impact on Homebuying
The COVID-19 pandemic brought many changes, including the rise of remote work. While that freedom to work from anywhere has led some people to rethink where they live, the impact on buying and selling homes has been smaller than you might think.
Only 25% of Americans who work remotely say that the ability to do so led them to consider buying a home in a different location.Buying in desirable locations — based on factors such as local amenities, the culture, and nearby attractions — is still important for homebuyers.
The Bottom Line on Surprising Homebuying Facts
Buying a home can seem difficult and stressful. You might think you know how the process works, or that you need a huge amount of money saved before you can even get started. But the facts about real estate transactions may offer a few surprises that make buying a home more affordable than you expect.
- U.S. Census Bureau (2021)
- Freddie Mac (2022)
- The Harris Poll (2021)
