Buying a home can be exciting—but it also comes with a lot of confusion, especially when it comes to mortgages. Many potential homeowners hold back because they believe myths that simply aren’t true. Let’s debunk some of the most common mortgage misconceptions so you can move forward with confidence.
1. You Need a 20% Down Payment
False. While a 20% down payment can help you avoid private mortgage insurance (PMI), many loan programs allow for much less. FHA loans require as little as 3.5%, and VA loans may require no down payment at all.
2. You Must Have Perfect Credit
A good credit score helps, but you don’t need a perfect score to get approved. Many lenders work with borrowers who have average or even below-average credit, especially through government-backed loan programs.
3. Pre-Qualification Means You’re Approved
Pre-qualification is just a rough estimate. Pre-approval is more reliable because it involves a deeper look at your finances and credit history. Always aim for pre-approval when you’re serious about buying.
4. The Lowest Interest Rate Is Always Best
A low interest rate sounds great—but it’s not the only factor to consider. Fees, loan terms, and whether the rate is fixed or adjustable all affect your long-term costs.
5. You Should Pay Off Your Mortgage As Fast As Possible
While being debt-free is a goal for many, rushing to pay off a mortgage early may not always be the best move—especially if you have higher-interest debts or could be investing that money elsewhere with better returns.
6. You Can’t Get a Mortgage If You’re Self-Employed
Self-employed borrowers can absolutely qualify for a mortgage. It may require more documentation—like tax returns and business records—but many lenders offer tailored solutions for entrepreneurs.
7. Renting Is Always Cheaper Than Buying
Not necessarily. While renting has fewer upfront costs, mortgage payments can be stable over time, unlike rent, which often increases. Plus, owning builds equity and long-term wealth.
Final Word
Don’t let myths keep you from exploring homeownership. Talk to a trusted mortgage professional, ask questions, and make decisions based on facts—not fear. With the right knowledge, you might be closer to buying a home than you think.