Debunking the most common mortgage myths

October 6, 2021

Buying a home can be exciting and scary. While shopping for homes is fun, dealing with the financial aspect can be exhausting. But that doesn’t need to be the case when you choose the right lender. Here at Village Patio Homes in Colorado, we asked our preferred lender to clear up the misconceptions, debunking the most common mortgage myths. Here’s what he offered.

I’ve been in the mortgage industry for 40 years and have helped thousands of families get into homes. Many of these homebuyers thought they would never be able to buy a new home. Some hadn’t saved the 20% down payment, others lacked perfect credit. Some people convinced themselves that renting is cheaper than owning, and the list goes on and on. 

Here are the top five mortgage myths that I hear most often. 

Myth #1: I must have been employed in my current job for two years. FALSE! While lenders do look for a two-year work history, that track record does not need to be with the same employer and not even in the same field. We’re looking for a consistent pattern of work commitment.

Here’s an example that will show you the flexibility we have to work with. Let’s say you graduated from a four-year college with a degree in Education. During those four years, you didn’t work while you concentrated on your studies. Now, you’ve just landed your first teaching job and you start in 30 days. Can you buy a home? The answer is, “Yes!” We count the four years of schooling as history, so your education contributes to your work history. 

A newly self-employed borrower is a different story, however. In certain cases, we can fit the borrower into a mortgage program when they have only a one-year with a strong work history in their profession. The best way to be sure is to talk to a lender. And if one says, “No”, keep looking. There are so many programs and mortgage lenders out there and they have their own specific criteria.

Myth #2: I need 20% down. FALSE! It’s great if you have that much to put down on your home, but it’s certainly not a requirement. In fact, in 2019, the average down payment on a house in the U.S. was 12% overall. First-time buyers paid an average of just 6%.

The Federal Housing Administration (FHA) offers a mortgage program that requires just 3.5% down if you have a credit score of at least 580. If your credit is between 500 and 579, you could still qualify for the program with 10% down payment. The Veterans Administration has a mortgage loan program for vets that finances 100% of the loan! If you qualify for the VA home loan, you can buy your home with no money down.

In addition to the FHA and VA home loans, there are several excellent conventional programs that require only 3% down. 

Myth #3: I must have excellent credit. FALSE! If that were the case, few families would own homes. It is true that the higher your credit score is, the better the interest rate you receive. If your credit score is at least 620, your mortgage application is likely to be approved.

Before you rule out buying a home because you think your credit score isn’t high enough, talk to a lender. We’re here to help! We can give you advice on how to improve your credit score or information on programs that are available to you with your current credit history.

Myth #4: Renting is cheaper than buying a home. This one is as FALSE as it gets! You may think you can’t afford a home, but that rent check you write every month is probably higher than a mortgage payment. Plus, the only one getting value is the landlord who is making a profit off your decision to rent. When you buy a home, you gain equity in your investment. With every payment, that equity grows, delivering a real return on your investment (ROI) as the years go by. And, as housing prices go up, your ROI and equity climb with it.

In addition, when you are renting, you can expect your monthly rent to increase every year. On the other hand, the monthly mortgage principal and interest payment stays the same for the life of your loan when you choose a fixed rate mortgage.

Myth #5: The lowest interest rate is the best option. Another FALSE! Don’t choose a mortgage loan program based solely on the interest rate. Some lenders advertise below-market interest rates that can be very tempting. Watch out. These programs might have other costs associated with that appetizing interest rate—and they can add up to thousands of dollars! A reputable lender should take the time and show you that paying these extra fees will take a minimum four years to reap the benefits of the lower interest rate. 

Don’t put off such a big opportunity as buying a new home based on myths and misconceptions. Get the facts. If you have any questions, don’t hesitate to reach out to me directly at or 303-877-4111.

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