- “You need a 20% down payment.” Fortunately, there are different mortgage programs that have a much smaller down payment requirement. For instance, FHA loans have a minimum down payment of 3.5%.
- “You will not be approved if you are self-employed.” Just like a regular job, the lender will want to see relevant self-employment history over a period of time, along with documentable income.
- “Prequalifying means you are already approved.” With prequalifying, the lender provides you with an idea of the amount you could be approved for but does not guarantee you are approved. If you want to be approved ahead of time, you must apply for a preapproved mortgage.
- “You must have good-to-excellent credit to get a mortgage.” There are mortgage programs for people with less-than-stellar credit. Granted, your interest rate tends to be a bit higher, but you can still be approved to buy your dream home.
- “Your debt-to-income ratio must be no more than 30%.” This is not true, as there are loan programs and lenders that will allow you to go up to 40% or sometimes higher.
Purchasing a home is supposed to be fun and exciting. While shopping for homes, you may hear several myths that can leave you feeling discouraged. Before you give up on your dream of owning a home and being approved for a home loan, let’s debunk some of the common myths.