Buying a home is one of the biggest financial moves most people ever make — but when it comes to mortgages, misinformation is everywhere.
From down payment misconceptions to credit score myths, false beliefs can stop you from getting approved or cost you thousands in unnecessary fees.
Let’s separate fact from fiction.
Here are 10 common mortgage myths you should stop believing — and the truth that could save you money.
🧱 Myth #1: You Need a 20% Down Payment to Buy a Home
Truth: You can buy a home with as little as 3% down.
While a 20% down payment can help you avoid private mortgage insurance (PMI), it’s not required.
Many programs — like FHA, VA, and USDA loans — allow low or even zero down payments for eligible buyers.
💡 Tip: Don’t wait to save for 20% if you’re financially ready now. The longer you wait, the more home prices (and interest rates) can rise.
💳 Myth #2: You Need Perfect Credit to Get a Mortgage
Truth: You don’t need an 800 credit score to buy a house.
Many lenders approve borrowers with scores as low as 580, especially for FHA loans.
Even with a lower score, you can still qualify — though your rate may be slightly higher.
✅ Smart move: Check your credit report, correct errors, and work on improving your score before you apply.
🧾 Myth #3: The Lowest Interest Rate Is Always the Best Deal
Truth: A low interest rate isn’t the only factor that matters.
Some loans offer low rates but come with high fees, points, or unfavorable terms.
Always compare the Annual Percentage Rate (APR), which includes both the rate and the costs, to see the true cost of borrowing.
🏠 Myth #4: You Can’t Get a Mortgage If You’re Self-Employed
Truth: You absolutely can — you’ll just need more documentation.
Self-employed borrowers can qualify with tax returns, profit-and-loss statements, and bank statements.
Some lenders even offer bank statement or non-QM loans for entrepreneurs and freelancers.
💡 Learn more: See our guide — How to Qualify for a Home Loan When You’re Self-Employed.
💼 Myth #5: Getting Pre-Qualified Means You’re Approved
Truth: Pre-qualification is only a rough estimate of what you might afford.
A pre-approval is what really matters — it’s a formal review of your income, credit, and debts.
With a pre-approval letter in hand, sellers take you seriously and you know exactly what price range to shop in.
🏦 Myth #6: You Should Always Choose a 30-Year Fixed Mortgage
Truth: Not necessarily.
A 30-year loan offers smaller payments, but you’ll pay more interest overall.
If you can afford a slightly higher payment, a 15- or 20-year mortgage can save you tens of thousands in interest.
💰 Example: On a $300,000 loan at 6%, a 15-year mortgage could save over $150,000 compared to a 30-year term.
🔄 Myth #7: Refinancing Isn’t Worth It Unless Rates Drop Drastically
Truth: Even a 1% rate drop can make refinancing worthwhile.
Lowering your rate can cut your monthly payment, shorten your term, or let you tap into home equity.
Just make sure the closing costs don’t outweigh the savings.
🧠 Myth #8: You Can’t Pay Off Your Mortgage Early
Truth: You can — and it can save you thousands.
Most modern mortgages have no prepayment penalties.
Even making one extra payment per year or rounding up your monthly payment can shorten your loan term by several years.
💡 Read next: How to Pay Off Your Mortgage Faster (Without Breaking the Bank).
💬 Myth #9: Renting Is Always Cheaper Than Owning
Truth: Not always.
While renting may seem cheaper upfront, homeownership builds equity — money that goes back into your future instead of your landlord’s.
And with fixed-rate mortgages, your payments stay stable, unlike rent that rises over time.
🔍 Myth #10: You Should Wait Until You’re Debt-Free to Buy a Home
Truth: You can qualify for a mortgage even with some existing debt.
Lenders care more about your Debt-to-Income (DTI) ratio, not whether you have zero debt.
If your DTI is under 43%, you’re usually in good shape.
✅ Pro Tip: Paying off small, high-interest debts first can help boost both your credit score and your borrowing power.
🧭 Final Thoughts
Mortgages can seem complicated, but most of the confusion comes from persistent myths that just won’t die.
Understanding the truth behind these misconceptions helps you:
- Get approved faster
- Secure better loan terms
- Save money over the life of your mortgage
Whether you’re buying your first home or refinancing, make your decisions based on facts, not myths.