Industry Myths Around Working with Lower-Income Buyers

The Homeownership Opportunity Alliance recently shared some persistent industry myths around working with lower-income home buyers. This information is especially timely now, as we prepare for $150 million in first-generation down payment assistance to come online in Minnesota this spring. With this development, real estate professionals have a huge opportunity to advance homeownership equity while building or strengthening their book of business among the fastest-growing segment of homebuyers.

Here are the facts around five of the most common unfounded concerns out there as gathered by the Homeownership Opportunity Alliance.

Myth #1
Transactions using down payment assistance are less likely to close successfully.
Reality
There’s no difference in the closing rate between transactions using down payment assistance and those not using this resource.

Myth #2
Processing transactions using down payment assistance takes too much time and effort.
Reality
Teams with the expertise onboard to quickly and efficiently process down payment assistance transactions have a larger and growing pool of potential business to draw from. Down payment assistance is becoming more and more common in transactions due to rising home prices and interest rates.

Myth #3
You can’t use more than one down payment assistance program in a single transaction.
Reality
Many down payment assistance programs can be combined, or layered, in a single transaction. Guidelines around this vary from program to program, and from institution to institution.

Myth #4
Working with lower-income households lowers my annual earnings.
Reality
Since lower-income households are one of the fastest-growing segments of the homebuyer market, there’s more business available at this level than any other. More transactions equal higher income.

Myth #5
Transactions using government loans such as FHA or VA are riskier for sellers than conventionally financed transactions.
Reality
Buyers approved for government loans are no riskier than those using conventional financing. Government loans do require a more stringent property appraisal process than conventional loans, but the required fixes to complete the sale are not likely to derail the transaction.
Additionally, from a practical standpoint, government loan buyers are a fast-growing segment of the market, and strong growth will likely continue as rising home prices and interest rates attract more and more buyers looking for a down payment they can afford.

Learn more about how real estate professionals can help advance homeownership equity.