Buying a home is one of life’s biggest milestones, but misinformation about mortgages can make the process feel intimidating. In honor of National Homeownership Month, we’re setting the record straight by busting some of the most common myths about getting a mortgage.
Myth 1: You need a 20% down payment to buy a home.
Truth: While putting 20% down can help you avoid private mortgage insurance (PMI), it’s not required. Many loan programs offer options with 3%, 5%, or even 0% down for qualified buyers. Don’t let this myth stop you from exploring your options.
Myth 2: You must have perfect credit to qualify.
Truth: Good credit can help you secure better rates, but you don’t need a flawless score to get approved. Many lenders work with buyers who have fair or even challenged credit histories. Your overall financial picture (including income, debt, and savings) matter too.
Myth 3: Pre-qualification means you’re fully approved.
Truth: Pre-qualification gives you a rough estimate of what you might afford, based on self-reported information. Pre-approval goes further, involving a credit check and documentation review, giving you and sellers more confidence in your buying power.
Myth 4: You can’t get a mortgage if you have student loans.
Truth: Student debt doesn’t automatically disqualify you. Lenders focus on your debt-to-income ratio (DTI), which shows how your monthly debt compares to your income. If your DTI is within an acceptable range, you can still qualify for a mortgage.
Myth 5: The lowest interest rate is always the best deal.
Truth: A super-low rate can be tempting, but look at the total cost of the loan, including fees and points. Sometimes a slightly higher rate with fewer fees is the smarter choice long-term. Ask your lender to help you compare.
Myth 6: You should always go with a 30-year fixed-rate mortgage.
Truth: A 30-year fixed mortgage is a popular option, but not your only one. If you’re planning to move within a few years or want to pay your home off faster, a 15-year mortgage or adjustable-rate loan might be a better fit.
Myth 7: Self-employed people can’t get mortgages.
Truth: You can absolutely buy a home if you’re self-employed, it just takes more documentation. Be prepared to show two years of income history, tax returns, and a strong financial profile.
The Bottom Line:
Don’t let myths keep you from exploring homeownership. If you’re thinking about buying a home, talk to a trusted lender who can guide you through your options and help you understand what’s really possible.
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Ready to take the next step? Reach out to our Mortgage team today!