When you’re buying a home, it can be tough to separate myth from reality. Misconceptions about mortgages can lead to unnecessary stress or missed opportunities. The following are five common mortgage myths that homebuyers often believe, and the truth behind each one.
Myth #1: A 20% Down Payment Is Required To Buy A Home
Reality: Although this is a persistent myth, it doesn’t reflect the mortgage options available for buyers. The truth? An FHA Loan makes it possible to purchase a home by putting down a much smaller down payment, even as little as 3.5%. This flexibility opens the door to homeownership for many buyers who might otherwise have waited years to save up enough money for a large down payment. HomeReady® and Home Possible® Loans also offer a lower required down payment, with multiple down payment sources allowed. VA Loans allow active or retired military personnel to get started with no down payment required at all.
Myth #2: Renting Is Always Cheaper Than Buying
Reality: Renting may seem cheaper in the short term, but mortgage payments build equity over time. Homeownership is an investment, and fixed-rate mortgages can protect owners from rising housing costs. In other words, rent goes up every year, but your fixed-rate mortgage doesn’t. That kind of stability is valuable in today’s financial landscape.
Myth #3: You Need Perfect Credit To Qualify
Reality: Credit scores matter, but they’re not the only factor. AmeriHome Mortgage also looks at income, employment history, and debt-to-income ratio. The good news is, there are programs available for buyers with lower credit scores. For example, FHA loans offer easier credit qualifications that make homeownership possible for buyers with low to mid incomes and credit scores. VA Loans also offer more flexible credit requirements, along with HomeReady® and Home Possible® Loans.
Myth #4: Pre-qualification = Pre-approval
Reality: A pre-qualification is a quick estimate based on self-reported data, which is helpful for getting a sense of what you can afford. A pre-approval, however, involves a full financial review and carries more weight with sellers. If you want to stand out in a competitive market, a pre-approval can strengthen your offer.
Myth #5: PMI Is Always Bad
Reality: Private Mortgage Insurance (PMI) is often viewed as a penalty, but it actually makes homeownership more accessible by allowing buyers to purchase with less than 20% down. Plus, PMI isn’t forever. Once you make enough payments to reach the threshold of 20% equity in your home, you can contact one of our Home Loan Experts and request to have it removed. When you think of it that way, PMI is really the bridge that gets you into your dream home sooner.
Buying a home is one of life’s biggest milestones, and understanding the facts can help you make informed decisions and enjoy a smoother journey to homeownership. Don’t let mortgage myths hold you back. Explore your options, ask questions, and work with one of AmeriHome’s Home Loan Experts to find the right path for you.
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*As a member of the AmeriHome family, borrowers are part of the AmeriPurchase+ program and qualify for a $750 lender credit for all of your home purchases done with AmeriHome, for any property you own. Credits will be applied only if your loan closes with AmeriHome. This offer can not be combined with any other offers and is not applicable for FHA Streamline, or VA IRRRL Refinance transactions. Other restrictions may apply. Terms and conditions are subject to change. The AmeriPurchase+ program is subject to termination without notice.
