Top Mortgage Myths Debunked
Myth #1: You need a 20% down payment
Many buyers still believe you must have 20% saved to purchase a home. While 20% can help avoid mortgage insurance, many programs let you buy with as little as 3% down.
Myth #2: Pre-qualification and pre-approval are the same
Pre-qualification is a basic estimate of what you might afford. Pre-approval is a formal, documented offer from a lender and carries more weight when house hunting.
Myth #3: You should always choose the lender with the lowest interest rate
The lowest rate may come with higher fees or stricter loan terms. Compare total loan costs—not just the rate—when choosing a lender.
Myth #4: You can’t get a mortgage with student loans
Having student loans doesn’t disqualify you. Lenders look at your debt-to-income (DTI) ratio to assess your ability to take on a mortgage.
Myth #5: All lenders are the same
Different lenders offer different loan types, underwriting standards, fees, and service quality. Shop around and ask questions to find your best match.
Myth #6: Your credit must be perfect
While higher scores help with better terms, many loan programs are available for buyers with fair or average credit, especially first-time buyers.
Myth #7: You can’t buy if you’ve changed jobs recently
Changing jobs doesn’t always mean denial. Lenders focus on income stability and whether your new job is in the same field or offers similar or better pay.
Myth #8: You’re stuck with the first mortgage you get
You can refinance to a better loan later. As your financial situation improves or rates drop, refinancing can save you thousands over the loan term.
Myth #9: The mortgage process takes forever
With proper documentation and preparation, many loans close in 21-30 days. Delays often result from missing paperwork or last-minute issues.
Myth #10: Renting is always cheaper than buying
While upfront costs of buying can be high, over time, owning can be more affordable due to equity growth, fixed payments, and tax benefits.
Myth #11: You should wait for the perfect market
There’s no perfect time. If you’re financially prepared and find a home you love, it’s often better to act than to try to time the market.
Myth #12: Self-employed people can’t get mortgages
Self-employed borrowers need to show consistent income and file accurate tax returns. Lenders evaluate your net income after deductions.
Myth #13: You only need to budget for the down payment
Closing costs, inspections, appraisals, and moving expenses can add up. Plan for an additional 2–5% of the home price in extra costs.
Myth #14: It’s better to pay off debt than save for a home
Reducing debt helps, but lenders also want to see savings. A balance of both strategies improves your mortgage approval odds.
Myth #15: You need to stay in the home forever
Even if you move in 5–7 years, building equity beats renting. Many homeowners upgrade homes as their needs change.
Myth #16: A 30-year fixed loan is always the best
It’s common, but not always best. If you plan to move or refinance in 5–10 years, a lower-rate ARM or 15-year mortgage could be smarter.
Myth #17: Your monthly payment is just the mortgage
It includes principal, interest, taxes, and insurance (PITI). Sometimes HOA dues, too. Budget for the full amount.
Myth #18: You can’t negotiate with lenders
Everything from interest rates to closing costs can be negotiated. Ask your lender for options or credits to reduce expenses.
Myth #19: Online mortgage calculators are 100% accurate
They’re great tools but don’t reflect all costs or lender criteria. Use them for estimates, but rely on pre-approvals for accuracy.
Myth #20: Buying a home is always a better investment than renting
Not always. Consider your lifestyle, job stability, and plans. In some markets or situations, renting may be smarter—for now.