When it comes to buying a home or refinancing one, most people don't realize just how much misinformation is floating around. Whether it’s coming from friends, family, or outdated online articles, mortgage myths can cause unnecessary fear, confusion, or even delay your homeownership dreams.
Let’s clear up five of the most common mortgage myths — and explain what’s actually true.
Myth #1: You Need a 20% Down Payment to Buy a Home
The Truth:
While a 20% down payment can help you avoid paying mortgage insurance, it’s not a requirement. In fact, many lenders offer options as low as 5%, and government-backed loans (like CMHC-insured mortgages in Canada) allow for down payments as low as 5% for homes under $500,000.
Why This Matters:
Waiting until you’ve saved 20% could mean missing out on years of equity growth or rising home prices. It’s worth exploring your options rather than assuming you’re not ready.
Myth #2: Getting Pre-Approved Guarantees You’ll Get the Mortgage
The Truth:
Pre-approval is an important step, but it’s not a guarantee. It’s based on your current financial picture — and if that changes (like a drop in income or a new loan), your final mortgage approval could be affected.
What to Do:
Once you’re pre-approved, avoid taking on new debt, changing jobs, or making large purchases. Keep your financial situation stable through closing day.
Myth #3: The Lowest Interest Rate Is Always the Best Deal
The Truth:
Everyone loves a low interest rate, but mortgages are about more than just the rate. A rock-bottom rate may come with restrictions, penalties for early repayment, or limited features that don’t fit your long-term goals.
The Smarter Strategy:
Work with a mortgage professional to compare the overall cost of the mortgage, not just the rate. Flexibility, portability, and prepayment privileges can sometimes save you more money in the long run.
Myth #4: You Should Always Choose a Fixed-Rate Mortgage
The Truth:
Fixed rates offer peace of mind with predictable payments, but they aren’t always the best fit for every situation. Variable-rate mortgages often come with lower starting rates and can save money if rates remain stable or drop.
What It Means for You:
Your choice should depend on your risk tolerance, financial plan, and how long you intend to stay in the home. Don’t default to fixed — evaluate both options with a professional.
Myth #5: You Can’t Get a Mortgage If You Have Less-than-Perfect Credit
The Truth:
While top-tier credit scores help you qualify for the best rates, you can still get a mortgage with a lower score. There are alternative lenders and programs specifically designed for those with bruised credit or self-employment income.
Pro Tip:
Rather than assume you’ll be denied, speak with a mortgage broker or financial advisor who can help you explore your options and possibly even improve your credit profile over time.
Final Thoughts: Don’t Let Myths Hold You Back
Buying a home is one of the biggest financial decisions you’ll make — and it deserves clear, accurate guidance. If any of these myths have been holding you back, now’s the time to dig deeper and get the right advice.
Have questions about your mortgage options?
Let’s talk. I’m here to help you cut through the noise, find a mortgage that works for you, and move one step closer to your dream home.
