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Affording a home

3 myths holding Hispanic homebuyers back

By Concepcion Guerrero

August 2019

Home. Family. Money. Debt. What do those words mean to you? If you’re Hispanic, they might mean something slightly different, and they might affect how you think about buying a home.

According to the NAHREP 2018 State of Hispanic Homeownership Report, Hispanics identify the top two obstacles to getting a mortgage as an insufficient credit score and the ability to afford a down payment.

These obstacles also apply to the general population, of course. But Hispanics may be at greater risk of placing too much stock in common homebuying myths based on values many of us inherited from our families or communities, along with our status as minorities in American culture.

Myth #1: “All debt is bad debt!”

Many Hispanic Americans grow up hearing that any kind of debt is bad, and cash is better. If your parents are immigrants, they may have negative associations with banking or lending based on experiences in their country of origin. You may have been taught that the safest place to save is your mattress.

But your credit history is critical when you’re ready to get a mortgage loan. You may be excellent at managing your money, but unless you have a paper trail that proves it, a lender may not be willing to lend you money to buy a house.

Some kinds of debt that can be good debt include:

  • Revolving credit accounts (credit cards), as long as you pay off your balance each month and use your credit wisely
  • Installment debt (for example, student debt or a car loan) that you pay back steadily – as long as you don’t miss any payments!

Learn more about the basics of establishing and maintaining good credit and about credit reports.

Myth #2: “A big down payment is always better.”

The Hispanic taboo around debt naturally leads into this second myth. Hispanic homebuyers may be more motivated than other populations to make large down payments to keep their monthly mortgage payment low and take on as little debt as possible. 

That was certainly the case for me when I started looking for my first home in 2010. I didn’t think I had enough for a down payment, and I was worried that my student loans would keep me from qualifying for a mortgage.

Then I sat down with a loan officer who took the time to understand my concerns and helped me run the numbers. In my case, using most of my savings for a large down payment didn’t make the drastic difference I expected in my estimated monthly mortgage payment. My loan officer also ran some scenarios to show me how making additional principal payments later might do more to reduce my mortgage debt than putting down a large down payment.

You can challenge your own assumptions about how much of a down payment you’ll need by doing a little research on low-down-payment mortgage options and experimenting with affordability calculators.

Myth #3: “Homeownership isn’t possible for me.”

Fannie Mae’s 2018 National Housing Survey shows that Hispanics have more concerns than the general population about obstacles to homeownership – for example, only 33% of Hispanics say it will be “somewhat or very easy to get a home mortgage,” compared to 55% of the general population.

At the same time, according to U.S. Census data, the percentage of Hispanic homeowners is growing every year at a faster rate than the rest of the population – they represent 62.7% of total net U.S. homeownership gains in the decade between 2008 and 2018.

So while Hispanics feel less confident about their ability to buy a home, more Hispanics than ever before are actually doing it. Down payments and credit scores can certainly be obstacles, but they aren’t insurmountable. You may be more ready to buy a house than you think, and a good loan officer can help you understand your options and possible next steps.

Resources for Hispanic homebuyers

If you think working with a loan officer or real estate agent who understands your cultural background will help you feel more comfortable, these organizations may be able to help match you to a professional who fits your needs: 

  • Local Hispanic organizations in your area
  • Local chapters of trade organizations
  • Local Hispanic chamber of commerce

¿Y si te sientes más cómodo en Español?

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Concepcion

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Concepcion Guerrero works in channel strategies for MGIC, where her bilingual and bicultural background has been a huge asset. She lives in Milwaukee with her husband, Miguel, and two children, Carolina and Andres, in a house with tons of character – the perfect place for creating family memories.
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