“They came of age when there was a real estate crash. But that was a completely different market that was oversized and over-leveraged,” he says.

Younger generations also experienced a drastic decline in interest rates in the first year of the COVID-19 pandemic.

“People are just looking for 2% and 3% rates and we may never see that again,” DiBugnara adds.

Alex Scheuchmann, the CEO and founder of LBC Mortgage, adds that he often encounters members of Generation Z and Millennials “who believe interest rates are higher than ever.”

At least 54% of Generation Z and Millennials surveyed said they believe mortgage rates are currently at an all-time high.

Mortgage interest myth debunked

Some people may think that the baby boomers – the generation between 60 and 78 – were able to buy homes for pennies. The reality is that in the 1980s Interest rates were much, much higher than they are today.

“Interest rates fluctuate, but they are not as high as many younger buyers think. In the past, there were significantly higher rates, and today’s rates are still relatively low,” says Shekhtman.

In October 1981 Its highest value was 18.63%.almost three times the current interest rate. By the end of the decade they had fallen to around 10%.

So, although interest rates are higher than their all-time low of 2.65% in 2021, the current rate of 6.75% is roughly in line with the years before the 2008 financial crisis.

“Historically, when rates are cut, prices go up – almost every time,” DiBugnara says. “Accepting a higher rate now, rather than every time they decide to cut rates, is still smarter.” No matter what your interest rate is, you’ll pay more for the house. You can always refinance to a lower interest rate, but not to a lower house price.”

Myth 2: You have to put down 20% to buy a house

One of the biggest myths is that home buyers have to put down at least 20%. Only 36% of respondents were aware that much fewer.

“One Generation Y client was convinced that he would have to save for years to make the required 20 percent down payment,” says Shekhtman.

Another Generation Z customer thought she would no longer be able to get a mortgage because of her student loans.

Myth about down payment debunked

Both of Shekhtman’s clients were able to buy houses.

“The home buying landscape has evolved and there are many resources and programs to help buyers,” he says.

FHA Loansinsured by the Federal Housing Administration, require only 3.5% deposit.

Military veterans and active soldiers are eligible for loans from the Department of Veterans Affairs and Buyers in rural areas could qualify for USDA Loans. Neither require You don’t need to put any money down. Note that the USDA has strict income limits and you must purchase in one of its approved territories.

In addition, there are several government-supported programsincluding the Conventional 97, HomeReady, HomePossibleAnd HomeOneallow homeowners to make a down payment of just 3%.

Although the requirements for each loan vary slightly, generally one of the applicants must be a first-time homeowner (or have not owned a home in the past three years) and have a credit score above 620. Additionally, the home must serve as a primary residence. Private mortgage insurance (PMI) is also required for these loans.

“The most important takeaway for younger generations is to get informed and work with experienced professionals who can guide them through the process,” Shekhtman says. “By debunking these myths and staying informed, Gen Z and Millennials can make confident and informed decisions about buying a home.”

Myth 3: You must have excellent credit to qualify for a mortgage

Only 28% of Gen Z and Millennials surveyed knew that you can get a mortgage with a credit score in the 500s. But in fact, there are several loans you can qualify for with a FICO score in the poor to fair range.

“Now there are so many ‘experts’ on social media and YouTube and you can get so much information that it’s harder to figure out what you should really be doing,” says DiBugnara.

Myth of creditworthiness debunked

FHA Loans require a credit score of 580 or higher if you put down 3.5%, or between 500 and 579 if you put down 10%.

These loans require private mortgage insurance (PMI), but you can request that it be waived once you pay off 20% of your mortgage. However, you will need to have your future home inspected and approved by a HUD appraiser.

Additionally, there are no minimum credit requirements for VA and USDA loans.

Generation Z and Millennials should remember to look at the “whole package,” says Anna DeSimoneFounder and former CEO of Bankers Advisory, a mortgage compliance assurance services company.

She adds that buyers need to pay attention to what incentives the lender offers, such as down payment assistance.

“Remember that there is no one-size-fits-all price and that the best mortgage program isn’t always about the lowest interest rate – it’s about finding the most suitable option that fits your household needs, financial capacity and long-term plans,” she says.