Is saving up for a down payment getting your potential homebuyer clients down? They might be stressing out about it more than they need to.

Roughly one-in-three surveyed individuals planning to purchase a home in the next three years reported that a full 20% down payment is required to qualify, according to Freddie Mac. Further, many of these potential homebuyers erroneously think their down payment funds may only come from savings.

first tuesday advocates a 20% down payment for more skin-in-the-game from homebuyers. Low down payments lead to homeowners with little or no equity in their home, a condition which makes it difficult or even impossible for homeowners to sell when they experience a financial hardship such as a job loss or health crisis.

However, the idea that it’s required to qualify? As any real estate professional can tell you, these beliefs about down payment amounts and sources simply aren’t correct.

Down payments may come from a variety of sources, and they are allowed to be as low as 0% for mortgages insured by the U.S. Department of Veterans Affairs (VA) or 3.5% for mortgages insured by the Federal Housing Administration (FHA).

Homebuyers report using several different sources for their down payment including:

  • savings, inheritance, retirement funds or other assets (70%);
  • sale proceeds from another property (31%);
  • gifts or loans from family or friends (23%);
  • seller contributions (16%);
  • assistance or loans from a non-profit or government agency (10%); and
  • a home equity loan, line of credit or other second lien (4%), as of 2016, according to the National Mortgage Database.

While most homebuyers report using a single source to fund their down payment, roughly 15% of survey respondents used multiple funding sources.

Cut through the noise

When today’s misinformed future homebuyers eventually talk with a mortgage or other real estate professional, they will likely realize their mistake. But until then, the concern from industry professionals is that these false beliefs are keeping otherwise qualified homebuyers from purchasing. 70% of surveyed potential homebuyers said the (false) 20% down payment requirement keeps them from buying today, and nearly 30% said it would prevent them from ever qualifying to purchase.

So how can real estate professionals reach these qualified homebuyers to let them know more of their options?

Agents can start by expanding their marketing efforts — their FARM — to renters. Gather a list of pertinent materials, including ones that address common questions and misconceptions from potential first-time homebuyers. These issues may include saving for a down payment, qualifying for a mortgage and local first-time homebuyer programs. Distribute these materials on a regular schedule and be open to talking and staying in touch with renters, even if they don’t have immediate plans to buy.

Take the first step to reach more future homebuyers with these sample FARM letters, free for you to download and personalize:

If nothing else, putting homeownership on the radar of renters will help them make a plan for saving and building up a down payment.