Mortgage Myths: Busted for Today’s Market
The Down Payment Deception
Myth: You need 20% down to buy a home - Reality: FHA loans as low as 3.5%, VA loans with 0% down, and conventional loans from 3–5% down.
August 2025 context: These programs are alive and well—perfect for first-time buyers and move-up buyers.
Myth: More down is always better - Higher down payments can drain your cash reserves—sometimes keeping money invested makes more sense.
Myth: Bigger down = instant equity jackpot - Truth: Yes, it lowers your monthly payment, but the equity increase is proportional to the down payment—not a windfall.
Credit Score Conundrum
Myth: Only 800+ credit scores qualify - Programs exist for buyers with scores in the mid-600s.
Rapid re-score tools - Dispute errors, pay down small balances, and see improvements in weeks—not months.
The DTI factor - Your debt-to-income ratio can be as important as your credit score in loan approvals.
Interest Rate Illusion
Lock vs. Float - When locking is smart, when staying flexible works better in today’s shifting market.
Myth: Wait for rates to drop - Predicting rates is like predicting the weather six months out—you’ll miss opportunities waiting.
APR vs. Interest Rate - APR includes fees and closing costs—true cost of borrowing.
The Pre-Approval Predicament
Pre-qual vs. Pre-approval - Pre-approval carries real weight with sellers; pre-qual doesn’t.
Shopping for lenders without hurting your score - Multiple mortgage inquiries within 45 days count as one hit on your credit.
Total cost reality check - Factor in property taxes, insurance, HOA fees, and maintenance—not just principal & interest.
Navigating the Niche Markets
Myth: Self-employed buyers can’t get mortgages - Use bank statements, asset depletion, and alternative income documentation.
First-time buyer perks - Grants, down payment assistance, and special programs still available in August 2025.
Renovation loan myths - FHA 203(k) and Fannie Mae HomeStyle streamline buying & renovating.