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8 Common Mortgage Lies Too Many Homebuyers Fall For

We debunk the most common mortgage myths so you can navigate the home-buying process.

By Chris Lewis, CEPF , Edited by Calista Headrick

Updated Oct. 19, 2026

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It can be daunting enough to be a homebuyer and figure out how to best finance your dream house. When you add in the lies and myths many people believe about the home-buying process, it can be even more stressful.

Luckily, there are certain ways to prepare that can make the whole process less stressful. Here's a look at eight common mortgage myths and the actual information you need to make smart homeowner decisions when securing your next home.

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You must put 20% down

Sure, it may be ideal to put down 20%. But if you're like many people, you don't have quite that much for a down payment. The good news is that there are programs to help. Government-backed FHA loans and VA loans are options.

Remember that if you put down less than 20%, you may need to pay for private mortgage insurance. It's added to your monthly mortgage payments because of the extra risk the lender takes.

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You need excellent credit to get a mortgage

An excellent credit score, just like a 20% down payment, may be the ideal situation. However, even with a less-than-perfect credit score, you can still get a mortgage.

While your credit history determines if you're approved for a loan and the interest rate, you're not out of luck with a lower credit score. Look around for mortgage programs available to borrowers without excellent credit.

Pre-qualified and pre-approved are the same thing

This one can be confusing if you're a new homebuyer. A pre-qualification estimates how much money you may be approved to borrow for a home loan. This information helps give you an idea of what you may be qualified to borrow as you search for your next home.

Pre-approval means the lender has verified your financial information and given you a letter listing your approved loan amount.

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Getting pre-approved guarantees you'll get a home loan

Don't just assume that you'll get a mortgage because you have been approved. There are many reasons why this may not happen. Changing jobs, adding additional debt, and not having enough money to cover the costs of getting the mortgage can all come into play.

That means if you're pre-approved for a home loan and are considering a financial change, check first with your mortgage professional to ensure your decision will not affect your mortgage.

Mortgage rates are the same no matter who your lender is

Here's a good note to keep in mind as a homebuyer: All mortgage rates are not created equal. You can have a lower monthly payment if you have a lower mortgage rate.

In fact, a lower rate can make a huge difference in your monthly payment. Since closing costs and other fees can add up and vary from one mortgage lender to another, you'll want to shop around.

Paying off a mortgage as quickly as possible is always the best option

Your mortgage may be one of your top debts, but that doesn't necessarily mean it's your best financial option to pay it off first. Paying off loans with higher interest rates first can be a smarter financial strategy than paying off a mortgage at a lower rate.

For example, if you have a personal loan at a 10% interest rate and a mortgage loan at a 3.5% rate, it probably makes better sense to pay off the personal loan first.

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You can't pay off your mortgage early

Some lenders include clauses called prepayment penalties inside the terms of the loan. That means you face a penalty if you pay off your mortgage too early. Since lenders earn money on loans when you pay interest on the principal you borrow, they earn more in interest the longer you make payments.

The good news is that these penalties are not nearly as common as they once were. So, you can find a lender without them and pay off your mortgage early if you have the budget.

Renting is always cheaper than buying a home

There's a lot to unpack with this one. First off, renting may be a cheaper option for you. However, there are many factors to consider. For one, the money you pay toward your mortgage goes back into your home's equity. That means you're getting a return on your investment over the years. If you have a fixed-rate mortgage, your monthly principal and interest payments are the same for the life of the loan.

Since rent prices typically climb at least every few years, having a mortgage may be cheaper in the long run. Here's another one: First-time homebuyers may be able to take advantage of special programs to help with closing costs and provide down-payment assistance.

Bottom line

Many mortgage myths floating around can make the home-buying process even more confusing.

From down payments to interest rates to loan qualifications, it's essential to research and shop around to protect your home budget. One step to consider is looking for programs and resources in your community that offer help as you work toward finding and financing that dream house.

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