Homebuyer myths…

There are a lot of mortgage myths out there – many are not correct! Let’s talk about common misconceptions when it comes to mortgages!

The first one I still hear is: You need a 20% down payment. This is not true. There are many programs that allow for as little as 3% down – maybe even zero down. VA and USDA loans allow you to put zero down. There are also down payment assistance programs that can help with a down payment, typically you need at least $1000 into the transaction. There are times you may need 20% down but it’s typically if you are buying an investment home.

The next one I hear frequently is: You can’t buy a home if you have student loans. This is not true. We do need to use a payment when you have student loans and the amount depends on what is on the credit report. If your credit report shows a payment on the credit report, typically that is what we use. If the payment shows zero, maybe because it is deferred, we need to use something. In most cases we will use a payment equal to .5% of 1% of the student loan balance. The type of mortgage you are using will determine the amount we use in a payment.

I’m a first time homebuyer, I should be able to get a special program. Maybe. There are first time homebuyer programs for many people but it does depend on your income and your credit. Most grants or special programs have guidelines we have to follow and they can vary from the area you can buy to what your income is. Sometimes the amount of non-retirement assets left over after you buy can affect if you qualify.

The payment I saw online will be my payment. This varies. The only way to know exactly what your payment will be is to complete a loan application and then we can figure out your payment. Your credit score can affect your payment, so can your down payment. Frequently the payment you see online is just principal and interest. It may not include your property taxes, homeowners insurance and mortgage insurance. It may not include a HOA payment if you are buying in an area with a homeowner’s association.

You have to have perfect credit to buy a home. Having great credit can definitely help you buy a home, but there are plenty of people that buy homes with less than perfect credit. You can buy a home with credit scores as low as 580 with an FHA mortgage.

It’s cheaper to rent than to buy a home. Sometimes it can seem that way. But remember when you are making a mortgage payment, you are paying down your mortgage and gaining equity in your home. When you make that rent payment, you are helping your landlord gain wealth, not you. Homes typically appreciate in value and can get a great way to build your own wealth. There is no guarantee your home will appreciate but there are very few years where homes have not gained value.

There are lots of other misconceptions out there – if you aren’t sure if something you are hearing is accurate, ask your loan officer or your realtor. We are here to answer your questions and help you in the process of buying a home!

Leslie Vanderwerf,  NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website

Written By

Currently a Senior Loan Officer at Cross Country Mortgage LLC, it's hard to believe I have been in the mortgage business for more than 25 years and have worked with Sharlene since 2000! I love sharing mortgage insights here each week and helping people finance their homes. Listening helps me find the right program for you!

Related Posts

Weekly real estate market update 6/14/24… home equity gains by state

🖨 Print Article Price changes are increasing as other stats trend down… Showings continue to hang below 2023, as they have for the last couple months… And new listings continue...

Mortgage rate updates

🖨 Print Article Wednesday morning started out with the May CPI report (Consumer Price Index) and it came out better than expected. The overall inflation report showed 0% for the...

Subscribe to Our Newsletter for Market Updates & Mid-Century Modern Listings

Our weekly HomesMSP Update includes current local market information and a curated list of mid-century modern properties for sale, plus posts from an inspector, a lender, a stager, info about neighborhoods, life in the Twin Cities… even recipes!


Blog Categories


Sharon and John Hensrud

About Us

The HomesMSP Team is committed to meeting you where you are and listening… really listening to understand you so we can use our extensive knowledge of the market and local neighborhoods to give you personalized service.