7 Mortgage Myths That Could Be Holding You Back

If you’ve ever hesitated to apply for a mortgage because you weren’t “financially perfect,” you’re not alone. The mortgage world is full of misconceptions—many of them outdated, and some just flat-out wrong.

These myths can cause people to delay buying a home for years—or worse, miss out on the benefits of homeownership altogether.

Let’s debunk seven of the most common mortgage myths, so you can move forward with clarity and confidence.

Myth #1: You Need a 20% Down Payment

The truth:
This is one of the most persistent myths in home buying. While a 20% down payment can help you avoid private mortgage insurance (PMI), it is not required for most loan types.

There are plenty of programs designed for buyers with lower down payments:

• 3% down for conventional loans (with solid credit)

• 3.5% down for FHA loans

• 0% down for VA and USDA loans (if eligible)

Waiting years to save 20% might delay your entry into the market unnecessarily—especially when home prices are rising.

Myth #2: You Need Perfect Credit to Get Approved

The truth:
You don’t need a 750+ credit score to qualify for a mortgage. While higher credit scores do unlock better interest rates and lower costs, many loan programs are designed for buyers with imperfect credit.

For example:

• FHA loans accept credit scores as low as 580 (and sometimes lower with larger down payments)

• Conventional loans typically require at least 620

• VA and USDA loans are flexible with credit as long as other parts of your application are strong

If you’re unsure, the best step is to speak with a lender. You may be closer to qualifying than you think.

Myth #3: You Shouldn’t Apply If You Have Student Loans or Debt

The truth:
Having student loans or other debts doesn't automatically disqualify you from getting a mortgage. What matters more is how that debt compares to your income.

Lenders use a metric called the debt-to-income ratio (DTI) to determine how much of your monthly income goes toward debt payments, including your future mortgage.

If your DTI is within acceptable limits—typically under 43–50% depending on the loan type—you can still qualify, even if you have student loans or a car payment.

Myth #4: Getting Pre-Approved Will Hurt Your Credit

The truth:
A pre-approval does result in a hard inquiry on your credit, which might cause a small dip in your score—but it’s usually very minor (often less than 5 points).

Also, credit bureaus recognize that you're likely shopping around. If you apply with multiple lenders within a 45-day window, it typically counts as one inquiry.

Don’t let fear of a credit pull prevent you from exploring your options.

Myth #5: Renting Is Always Cheaper Than Buying

The truth:
At first glance, renting might seem cheaper—especially when you factor in maintenance, property taxes, and insurance. But over time, buying a home can build equity and offer long-term savings that renting simply can't match.

While rent payments go to a landlord, mortgage payments help you own an asset that can appreciate in value.

Plus, with fixed-rate mortgages, your payment stays predictable—unlike rent, which can increase year after year.

Myth #6: You Can’t Use Gift Money for a Down Payment

The truth:
Yes, you can use gift funds for your down payment—as long as the money comes from an acceptable source and is properly documented.

Most lenders allow gifts from:

• Parents

• Grandparents

• Siblings

• Aunts and uncles

• Legal guardians

• Domestic partners

You’ll typically need a signed gift letter stating the funds are not a loan and don’t need to be repaid. Your lender may also request a paper trail to verify the transfer.

Myth #7: All Lenders Offer the Same Rates and Terms

The truth:
Mortgage rates, fees, and loan options vary from lender to lender. Some lenders charge higher origination fees. Others might offer better rates for certain credit tiers or loan types.

It pays to shop around. Getting quotes from multiple lenders could save you thousands over the life of the loan.

Look at:

• Interest rate

• Annual percentage rate (APR)

• Closing costs

• Lender fees

Don’t just accept the first offer—compare your options like you would with any major purchase.

Final Thoughts: Don’t Let Myths Block Your Path to Homeownership

The mortgage process has its complexities, sure—but it's also more accessible than many people realize. The biggest obstacle isn’t always your income or your credit—it’s the misinformation that makes people give up before they even begin.

If you’ve been waiting on the sidelines, it’s worth having a conversation with a lender or housing advisor. Ask your questions. Get real numbers. Explore your options.

You might just find that homeownership isn’t a far-off dream—it’s a lot closer than you think.