Ospina says a first-time buyer book built on busting this myth shows what's possible
The idea that a homebuyer needs 20% down has been debunked so many times that it should not still be shaping who applies for a mortgage. Down payment assistance programs, low-down-payment loans and educational campaigns have existed for years specifically to counter it.
Even so, the myth persists. Brokres across the industry still report meeting buyers who assume they cannot qualify simply because they have not saved a fifth of a home's purchase price.
One company says the number of buyers still sitting on the sidelines because of that misconception represents real, recoverable volume.
Fernando Ospina (pictured top), chief production officer at SimplyPMG, formerly known as Panorama Mortgage Group, said his company has built much of its recent growth around proving the myth wrong.
"We do believe that there's a ton of volume trapped behind that down payment misperception, where they need to come in with 3%, 5%, 10%, 20%," Ospina told Mortgage Professional America. "We'll continue to focus on that, and we won't steer off course in terms of getting off that first-time homebuyer train."
Targeting first-time buyers
Ospina said first-time buyers made up an unusually large share of SimplyPMG's recent business.
"Ninety percent of our consumers last quarter were first-time homebuyers," he said.
That number reflects a deliberate strategy rather than a coincidence of who happened to apply, according to Ospina.
"When you get into that kind of first-time homebuyer number, that handholding is something that we really pride ourselves on," he said. "Anytime you're going to go drop $500,000 on your first home, it's a scary moment, and our originators don't take that lightly. They go into that conversation detailed, explaining every part of the process."
Ospina pushed back on the idea that affordability concerns have scared off first-time buyers.
"I don't believe that the demand for a first-time homebuyer to get into a home has waned one bit," he said. "Getting into a home far outweighs renting in most cases, and these people understand that owning a home and building equity sooner rather than later is a safe bet. By the time you're done with that mortgage, you will have equity, whereas with renting, you'll have none of that."
Breaking the myth
Down payment assistance is a major part of how SimplyPMG turns that demand into closed loans, according to Ospina. He said the company tracks usage closely because it shows how much business depends on buyers simply knowing the option exists.
"Last quarter, 30% of our first-time homebuyers used some form of DPA," he said. "And of that 30%, about 50% of it used that DPA as a forgivable grant, so they were getting into these homes where the down payment is forgiven."
Ospina said the persistence of that belief still catches him off guard, and he’s sure brokers feel the same way when they talk to those still believing they can’t qualify for a mortgage.
"I remember originating thinking there's no way people still believe you need 20%, and more and more we would find that people did come into it thinking you needed 20%," he said. "As the consumer continues to get educated through Claude or ChatGPT or the news, I do think that will start to go away, and we want to be there for when that wave happens.
“We want to help push that narrative so people know that regardless of the situation, credit score 550 or credit score 800, 20% down or 0% down, we'll be there to support them."
It’s not just the down payment myth that is holding back buyers. There are also misconceptions around down payment assistance programs, according to Ospina.
"Another misperception about DPAs is that they're complicated loans. They really aren't," he said. "You qualify them the same way you would a traditional loan, and if you get that consumer, now you have a consumer that's in this loan for life."
He pointed to one of the company's branches as proof of how much volume is available to originators willing to specialize in it.
"Our top branch in California, I think 60% or 70% of their business is all DPA, and they have a line out the door," he said. "Someone is always looking for a way to get into these homes, and they're capitalizing on it where other lenders may not, because it might require one or two more touches."
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