Becoming a homeowner should be exciting, not daunting. With so much information available, it can be hard to know what step to take first, making the path seem more complex than it actually needs to be for you. Let’s break down some of the most common mortgage myths to help clear the way and empower you during your homebuying journey.

Mortgage Myth #1: You Need To Put 20% Down To Buy A Home

A down payment is the initial payment you must make toward the purchase of your house, and it doesn’t need to be 20% of the purchase price. There are a variety of mortgage loan options that require far less than 20% for a down payment, and even some options that don’t require any money down upfront at all.

For example, FHA loans may only ask for 3.5% down from qualified borrowers, whereas other government-backed loans offer eligible homebuyers the possibility of putting 0% down. Simply said, needing 20% for a down payment is no longer the standard and many different loan options exist.

Mortgage Myth #2: You Need A Perfect Credit Score To Qualify For A Mortgage

Is your credit score a work in progress? That’s okay. A perfect credit score isn’t required to buy a home. Your credit score is basically a track record of your credit history that shows lenders your ability to pay back a loan.

But, what is considered a good credit score to qualify to buy a house? The truth is, it can depend on your personal situation, the type of home loan you need, or even the county or state you live in.  If you are worried that you won’t get approved because of your credit score, reach out to your local mortgage broker, who can guide you with best practices for building up your credit score. It might not take as long as you think, and small improvements can go a long way to bring you closer to your homeownership dream.

Mortgage Myth #3: You Can’t Buy A House With Debt

While your debt-to-income-ratio (DTI) is an important consideration during the loan process, having debt does not exclude you from qualifying for a mortgage.

Your DTI is an indicator that lenders use to compare the amount of debt you incur or owe on a monthly basis in relation to your income. It’s generally calculated by taking all your monthly debt payments and dividing them by your gross monthly income. In general, a lender might look for your DTI to be around 35% or lower, meaning 35% of your monthly income goes toward paying debt. But some government-backed agencies lend to borrowers with a DTI of up to 49%.

So, can you buy a house with debt? Absolutely. While your debt is taken into account, having debt in general does not exclude you, particularly if you have a strong credit score to show you make payments regularly and on time.

Mortgage Myth #4: Buying A Home Is More Expensive Than Renting

If you compare what you pay for rent each month, seeing the purchase price for a house can seem much more expensive. Yet, depending on the area you live in, a monthly mortgage payment for a home can be very close to what you currently pay for rent. That means for a similar monthly expense, you could own a home instead of putting money into your landlord’s pockets.

Long-term financial benefits have to be considered, too. Owning a house over the long term allows you to build equity, essentially increasing your net worth, while providing you with the stability and freedom of having a place you can truly call your own. Also, if you have a fixed-rate mortgage, your monthly principal and interest payment is typically more consistent than a rent payment over time. While rents are rising faster than wages across the country, once a home payment is locked in, it stays the same over the life of the loan.

If you’re wondering whether to rent or buy a house next, a mortgage broker can help you take a detailed look into monthly costs and the long-term benefits that may make homeownership the more appealing choice.

Mortgage Myth #5: The Mortgage Process Is Long And Complicated

Not when you have an expert by your side! With the guidance of a mortgage broker, the loan process actually becomes much faster and simpler than you probably think.

These local home loan experts will navigate the mortgage landscape for you, negotiate terms and rates, and can help expedite the entire process. In addition, their extensive knowledge and network come with loan options that offer better pricing and rates than the industry average and can lead to long-term savings for you. And you don’t need to worry about preparing anything before reaching out since they can help you determine what’s relevant for you based on your priorities.

Now that these mortgage myths are busted, you’re ready to take the next step. Connect with a local home loan expert on Mortgage Matchup today!