According to a recent survey conducted by Wells Fargo, a majority of African Americans and Hispanics believe that a 20 percent down payment is required to purchase a new home (source: Boston.com, 8/3/15):
Consumers also overestimated the amount of money needed for down payment funds to qualify for a home loan, with 36 percent believing a 20 percent down payment is always required…
Fifty-eight percent of African-Americans and 55 percent of Hispanics reported the belief that a 20 percent down payment is required. In reality, several options are available with down payments as low as 3 percent, 3.5 percent or 5 percent for different loan programs.
This misperception about the requisite down payment funds needed to purchase a home represents an opportunity for lenders to gain market share and satisfy Fair Lending and CRA objectives. The findings of the survey suggest that by implementing strategies that can improve home buying education, a lender may be able to expand the pool of interested protected class applicants and leverage its brand to penetrate this newly empowered segment.