Heard a lot of conflicting claims about mortgages? With so much information floating around, it’s easy to feel unsure about what’s fact and what’s fiction. These common mortgage myths can discourage buyers, delay decisions, or lead people to overlook options they qualify for.

Let’s clear up five of the most persistent mortgage myths still circulating. Whether you’re buying your first home or just exploring your options, knowing what’s true will help you make smarter, more confident decisions.

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Mortgage Myth 1: You Need a 20% Down Payment

The 20% “rule” is outdated. While once common, it’s no longer a requirement. Today, most buyers put down far less, many qualifying for loans with as little as 3% down, or even zero in some cases.

Modern Low Down Payment Options

Several loan programs make it possible to buy a home with much less cash upfront:

• Conventional Loans – Some conventional loans allow qualified buyers to put down as little as 3%.
• FHA Loans – Backed by the Federal Housing Administration, these loans require just 3.5% down and are ideal for buyers with moderate credit scores.
• VA Loans – For eligible veterans, active-duty service members, and some surviving spouses, VA loans often offer no down payment and no PMI.
• USDA Loans – Available to qualifying buyers in eligible rural and suburban areas, USDA loans do not require a down payment.
• Down Payment Assistance Programs – Many state and local programs provide grants or forgivable loans to help cover down payments and closing costs.

Mortgage Myth 2: You Need Perfect Credit to Get Approved

Many buyers assume that unless their credit score is flawless, they won’t qualify for a mortgage. This myth keeps people from even exploring their options when in reality, lenders look at the full financial picture.

The Truth About Credit and Mortgages

A high credit score can help you secure a better interest rate, but you don’t need perfect credit to qualify. Most loan programs are designed to accommodate a range of credit histories. In fact:

• Conventional loans typically require a minimum credit score of 620.
• FHA loans can go as low as 580 (or even lower with a higher down payment).
• VA and USDA loans tend to be more flexible and may accept lower scores depending on the lender.

What Lenders Look At

Lenders evaluate several factors alongside your credit score, including:

• Debt-to-income ratio (DTI) – How much of your monthly income goes toward debt payments.
• Employment and income stability – Consistent work history and reliable income.
• Savings and reserves – Available funds for a down payment and unexpected expenses.
• Recent credit behavior – On-time payments and responsible credit use matter more than a few old mistakes.

With the right loan program and some guidance, even buyers with “fair” credit can become homeowners. Don’t let old credit mortgage myths keep you from exploring your options.

Mortgage Myth 3: You Should Always Choose the Lowest Interest Rate

It’s easy to assume the lowest interest rate is automatically the best offer. But focusing only on the rate can lead you to overlook other important factors like fees, loan structure, and how long you plan to stay in the home.

Why a Lower Rate Isn’t Always the Better Deal

Some lenders advertise ultra-low rates to grab attention, but those rates often come with trade-offs:

• Higher upfront costs – You may have to pay discount points or higher fees to secure a lower rate.
• Longer break-even period – If you sell or refinance before you’ve saved enough to offset those upfront costs, you could lose money.
• Less flexible loan terms – Some low-rate options come with restrictions like prepayment penalties or fewer refinancing opportunities.

What to Look at Instead

Choosing the right mortgage means balancing the rate with your overall financial goals. Ask:

• What are the closing costs and total upfront fees?
• How long do I plan to stay in the home?
• Will this loan give me flexibility if I want to refinance or pay off early?

Mortgage Myth 4: Getting Pre-Qualified is the Same as Getting Pre-Approved

Many buyers assume that being pre-qualified and pre-approved mean the same thing. But in reality, there’s a big difference—and confusing the two could cost you the home you want.

What Pre-Qualification Means

Pre-qualification is an early, informal estimate of how much you might be able to borrow. It’s based on self-reported information and doesn’t require documentation or a credit check.

• No documents required
• No hard credit inquiry
• Gives a general ballpark estimate

What Pre-Approval Means

Pre-approval is a more in-depth process where lenders review legal documents. In return, you get a pre-approval letter confirming how much you’re conditionally approved to borrow.

• Requires pay stubs, tax returns, and bank statements
• Includes a hard credit check
• Strengthens your offer with sellers

Why It Matters

A pre-approval shows you’re a serious buyer and gives you a competitive edge, especially in a market with multiple offers. Pre-qualification can’t offer that same weight.

Mortgage Myth 5: All Lenders and Loans Are the Same

Many buyers think mortgage lenders all offer the same rates, fees, and loan options. But that’s not the case. Assuming all lenders are alike can lead to missed savings, higher fees, and a mortgage that doesn’t quite fit your financial goals.

Why Lenders Aren’t All Alike

Banks, credit unions, online lenders, and mortgage brokers each have different loan offerings, approval criteria, and service models. Even two lenders offering the same type of loan, like an FHA or conventional mortgage, can quote different rates or charge different fees.

• Interest rates vary daily, and from lender to lender
• Closing costs and fees aren’t standardized
• Some lenders offer unique loan programs, others don’t

Not all lenders offer the same loan options. Depending on your situation, one lender might offer programs that better match your credit score, down payment amount, or employment history. It’s best to consult your lender about the different options available so you can find the best fit for your unique situation.

Ready to Leave the Mortgage Myths Behind?

The truth is, mortgage myths often do more harm than good, stopping people from pursuing homeownership, settling for the wrong loan, or leaving money on the table. You don’t need a perfect credit score, a 20% down payment, or to take the first offer you see. With the right lender and the right information, homeownership is more possible than ever.

At Mortgage 1, we’re here to help you cut through the noise. Our experienced team takes the time to understand your goals, explain your options, and match you with a mortgage that fits your life, not a myth.

Contact Mortgage 1 today or get pre-approved with ProSNAP, our simple, secure, and fast online application to start your homeownership journey with confidence.