Mortgage Myths & Facts: Separating Truth from Fiction

When it comes to getting a mortgage, misinformation is everywhere. As a mortgage professional with over 12 years of experience, I’ve seen too many homebuyers hold themselves back because they believed something that simply wasn’t true. From thinking you need a 20% down payment to assuming your credit has to be perfect, these myths can keep people from achieving homeownership.

Let’s set the record straight by debunking some of the most common mortgage myths and replacing them with industry facts you can trust.

Myth #1: You Need a 20% Down Payment to Buy a Home

🔹 The Truth: You can buy a home with as little as 3% down—or even 0% if you qualify for certain loan programs.

While a 20% down payment can help you avoid private mortgage insurance (PMI) and lower your monthly payments, it’s not a requirement for buying a home. There are several mortgage options with lower down payment requirements:

✔️ FHA Loans: 3.5% down (for credit scores 580+)

✔️ Conventional Loans: 3-5% down for first-time buyers

✔️ VA Loans: 0% down (for eligible veterans)

✔️ USDA Loans: 0% down (for qualifying rural areas)

Bottom Line: If saving 20% is holding you back, don’t let it! There are many affordable loan options designed for buyers with low down payments.

Myth #2: You Need Perfect Credit to Qualify for a Mortgage

🔹 The Truth: You don’t need perfect credit to get a mortgage—there are loan options for buyers with scores as low as 500.

While a higher credit score can get you a better interest rate, there are still great loan programs available for borrowers with lower credit:

✔️ FHA Loans: 580+ credit score (500+ with a 10% down payment)

✔️ VA Loans: No set credit minimum, but 580-620 is preferred

✔️ USDA Loans: 640+ for most lenders

✔️ Non-QM Loans: Flexible for self-employed or those with credit issues

If your credit score is lower than 700, you may have a slightly higher interest rate, but you can still qualify for a loan and refinance later.

Bottom Line: Don’t assume your credit is too low to buy a home. It’s always worth talking to a mortgage expert to see what’s possible.

Myth #3: Getting Pre-Qualified is the Same as Getting Pre-Approved

🔹 The Truth: Pre-qualification is a quick estimate, while pre-approval is a real commitment from a lender.

Many homebuyers assume pre-qualification means they’re good to go, but that’s not the case. Here’s the difference:

✔️ Pre-Qualification: Based on basic financial details you provide (no credit check). Not a guarantee.

✔️ Pre-Approval: A lender reviews your income, credit, and debt to determine how much you can actually borrow. Stronger when making an offer.

Bottom Line: If you’re serious about buying a home, get pre-approved—not just pre-qualified. It will make you a stronger buyer in a competitive market.

Myth #4: The Lowest Interest Rate is Always the Best Option

🔹 The Truth: A low interest rate doesn’t always mean the best loan deal—closing costs, loan terms, and fees matter too.

Many buyers only focus on interest rates, but hidden fees can make a “low-rate” loan more expensive in the long run. Before choosing a loan, consider:

✔️ Loan Origination Fees – Some lenders offer lower rates but charge higher upfront fees.

✔️ Points & Buydowns – A lender might lower your rate if you pay discount points, but that’s not always the best move.

✔️ Loan Term – A 15-year loan has lower rates than a 30-year loan but comes with higher monthly payments.

Bottom Line: Always compare the full cost of a mortgage, not just the interest rate. A slightly higher rate with lower fees can actually save you money over time.

Myth #5: You Should Always Pay Off Your Mortgage Early

🔹 The Truth: Paying off your mortgage early can be smart, but not always the best financial move.

Many homeowners assume that eliminating mortgage debt is the best financial decision, but consider these factors:

✔️ Do you have high-interest debt? If you have credit cards at 18-25% interest, paying those off first makes more sense.

✔️ Do you have enough savings? It’s better to have an emergency fund than put everything into paying off your home early.

✔️ Are you investing? If your mortgage rate is 3-5%, investing in stocks or retirement accounts may give you higher returns.

Bottom Line: Paying off your mortgage early can be great, but only if it makes financial sense in your bigger picture.

Myth #6: Renting is Always Cheaper Than Owning

🔹 The Truth: While renting may have lower upfront costs, homeownership builds long-term wealth through equity.

If you’re paying $1,500+ per month in rent, you’re helping your landlord build wealth instead of investing in your own future.

✔️ Rent Payments: 100% goes to your landlord—you build no equity.

✔️ Mortgage Payments: Every payment builds home equity, giving you an asset.

✔️ Property Appreciation: Home values increase over time, helping homeowners build wealth.

Example: If you pay $2,000 per month in rent for 5 years, that’s $120,000 spent with zero return. But if you own a home, that same money builds equity and net worth.

Bottom Line: In many cases, owning a home is a smarter long-term investment than renting—especially as rents keep rising.

Get the Right Mortgage Information

There are a lot of mortgage myths out there, but believing them can cost you time, money, and opportunities. Whether you’re a first-time homebuyer, a veteran, or self-employed, there’s likely a mortgage option that fits your needs.

At Harmony Home Mortgage, I help homebuyers separate fact from fiction so they can make informed decisions. If you’re thinking about buying a home and aren’t sure where to start, let’s talk. No myths—just real answers.

Ready to get expert mortgage advice? Schedule a free consultation today!