Buying your first home is an exciting milestone, but it can also feel overwhelming, especially with all the misconceptions floating around about mortgages. If you’ve ever delayed taking the plunge into homeownership because of something you’ve heard, you’re not alone. Let’s bust the top five mortgage myths and set the record straight, so you can confidently take the next step toward owning your first home.
Myth #1: You Need a 20% Down Payment to Buy a Home
Many first-time buyers think they need to save a massive 20% of the purchase price before they can even consider buying a home. While a larger down payment can reduce your monthly mortgage costs, it’s by no means a requirement.
In fact, in Canada, you can buy a home with as little as 5% down for properties under $500,000. Even if your dream home costs more than that, there are options for combined down payments. There are also programs like the First-Time Home Buyer Incentive that can help make homeownership more affordable.
Myth #2: You Need a Perfect Credit Score
Sure, having a high credit score helps you secure better rates, but it’s not the only factor lenders consider. Many first-time buyers assume that a single missed payment or a slightly lower score disqualifies them from getting a mortgage. That’s not true.
I work with a variety of lenders—A lenders, alternative lenders, and private lenders—who understand that life happens. If your credit score isn’t perfect, there are still plenty of options available. The key is understanding your unique situation and finding the right lender for your needs.
Myth #3: Fixed-Rate Mortgages Are Always Better Than Variable Rates
This is a classic debate. Fixed-rate mortgages offer stability, as your interest rate won’t change for the term of your loan. Variable-rate mortgages, on the other hand, fluctuate based on market conditions, which can lead to lower payments when rates drop.
The truth is, neither option is inherently better—it depends on your financial goals, risk tolerance, and the current market. I always recommend discussing your situation with a knowledgeable mortgage agent (like me!) to determine the best fit for your needs.
Myth #4: You Can’t Buy a Home If You Have Debt
It’s common to have some debt—whether it’s from student loans, car payments, or credit cards—especially as a young professional or tradesperson. The idea that you must be completely debt-free to qualify for a mortgage isn’t true.
Lenders look at your overall financial picture, particularly your debt-to-income ratio (DTI). If your income supports both your existing debts and a mortgage, you can still be approved. Plus, there are strategies we can use to improve your financial standing before you apply.
Myth #5: Mortgage Pre-Approval Guarantees Loan Approval
Getting pre-approved is an important first step in the home-buying process. It gives you a clear idea of how much you can borrow and shows sellers you’re serious. However, pre-approval isn’t a guarantee.
The final approval process comes later and considers additional factors, like the property you’re purchasing and any changes in your financial situation. That’s why it’s crucial to work with a mortgage agent who can guide you through the process and help you avoid surprises.
Conclusion: Knowledge Is Power
Understanding the realities of mortgages can save you time, money, and stress as you embark on your home-buying journey. By busting these myths, I hope you feel more empowered to take the next step toward owning your first home.
If you’re ready to explore your options or just have more questions, I’m here to help. Let’s make your homeownership dream a reality—without the myths getting in the way.
Cheers,
Todd
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