John Varano

Before the housing crash, first-time home buyers typically accounted for 40 percent of home sales in any given year. Last year, that same group accounted for just 32 percent of buyers. And yet, the Harvard Joint Center for Housing Studies expects the country's 86 million millennials – along with other first-time buyers – to form about 1.2 million new households per year for the next 10 years. Danny Gardner, Freddie Mac's vice president, wrote recently that the gap between pent-up demand and actual home buyers can be explained, in part, by persistent misunderstandings about how the buying process works, what it takes to be approved for a loan, and how much is needed for a down payment. “Information is part of the answer,” Gardner wrote. “We have to drive a stake through a few stubborn myths that are draining life out of the market. These familiar myths lead potential buyers to overestimate the credit, income, and down payment savings they need for an affordable mortgage.” Among the mistaken beliefs that may be keeping young Americans out of the market, believing that they need a 20 percent down payment is a big one. In fact, new programs allow qualified buyers to purchase a home with as little as 3 percent down and 40 percent of buyers put down less than 10 percent. Other common buyer misconceptions include, feeling their credit score is inadequate, the process is too complicated, and a previous rejection will prevent them from being approved again.