The Mortgage Myths Keeping People From Buying a Home

Many people delay buying a home based on outdated or incorrect information about what it takes to qualify for a mortgage. The truth is that requirements like credit scores, down payments, and debt levels may be more flexible than you realize. Here are five of the most common mortgage myths and what you should actually know.

Do You Need a Perfect Credit Score to Get a Mortgage?

No. This is one of the most common misconceptions about getting a mortgage. Many people assume you need an 800+ credit score to even be considered for a home loan. In reality, many buyers qualify with credit scores that are far from perfect. Of course, a higher score can help you get better rates and terms, but flawless credit is not a requirement. 

Lenders understand that life happens. Medical bills, student loans, or financial setbacks from years ago don't automatically mean homeownership is off the table. If you're unsure where your credit stands, SAFE members can check their FICO Credit Score for free through Online and Mobile Banking.

Do You Really Need to Put 20% Down on a House?

No, and this myth keeps more potential buyers on the sidelines than almost anything else. While putting 20% down can help you avoid private mortgage insurance (PMI), many homebuyers purchase homes with much less. Some buyers qualify for low down payment options, and SAFE offers mortgage programs with financing up to 100%* so waiting years to save a large down payment may not be necessary.

Should You Wait for Mortgage Rates to Drop Before Buying?

Not necessarily. Many people delay buying while waiting for the perfect mortgage rate. The problem is that nobody can predict exactly what rates will do. Interest rates are only one piece of the equation. Home prices, inventory, rent increases, and your personal finances all factor into the decision. Waiting can actually cost more if home prices keep rising while you sit on the sidelines.

Something many buyers overlook: you can refinance a mortgage later if rates improve, but you can't go back and buy a house at yesterday’s price. Check current SAFE mortgage rates to see where things stand today.

Is Renting Always Cheaper Than Buying a Home?

Not over time. Renting can seem cheaper upfront because there is less responsibility, but every rent payment goes to a landlord instead of building equity for you. A mortgage payment builds ownership in an asset that may increase in value. Buying may not be right for everyone immediately, but many renters are surprised to learn their potential mortgage payment could be similar to, or even less than, their current rent. SAFE’s home affordability calculator can help you compare.

Should You Pay Off All Debt Before Buying a Home?

Not necessarily. Having some debt is normal. In fact, many homebuyers purchase homes while still carrying car loans, student loans, or credit card balances. What lenders care about most is your debt-to-income ratio, which is how much of your monthly income goes toward debt payments. If your ratio falls within acceptable limits, existing debt doesn't have to prevent you from buying a home. A SAFE mortgage loan officer can review your full financial picture and help you understand where you stand.

What Is the Biggest Mortgage Myth?

Believing you are not ready without actually exploring your options. A quick conversation with a SAFE mortgage expert can provide clarity and a better understanding of what's possible. Even if you're not ready to buy today, getting informed now helps you prepare for the future. Read our Complete Homebuying Guide to start learning more.

Frequently Asked Questions

Q: What credit score do I need to buy a home?

A: You do not need a perfect credit score. Many buyers qualify with scores well below 800. A higher score helps you get better rates and terms, but lenders consider your full financial picture, not just one number.

Q: How much do I need for a down payment on a house?

A: It depends on the loan program. While 20% down avoids private mortgage insurance, many buyers put down much less. SAFE offers mortgage programs with up to 100% financing for qualifying borrowers.

Q: Is it better to rent or buy a home?

A: Over time, buying typically builds more wealth because mortgage payments build equity in an asset. However, the right choice depends on your financial situation, how long you plan to stay, and local market conditions.

Q: Should I wait for lower interest rates before buying a home?

A: Waiting for lower rates is risky because home prices may continue rising. You can refinance later if rates drop, but you cannot go back and buy at a lower price. Consider the full picture, not just the rate.

Q: How much debt can I have and still qualify for a mortgage?

A: Lenders look at your debt-to-income ratio rather than total debt. If your monthly debt payments are within acceptable limits relative to your income, you can still qualify. A loan officer can help you evaluate your situation. 

^{*Loans are subject to credit union membership, eligibility and verification of information provided on the application. Minimum credit score of 700 is required to qualify for 100% mortgage financing; other restrictions may apply. The interest on the portion of the loan that exceeds the value of the dwelling is not tax deductible and the consumer should consult their tax advisor. All loans subject to credit approval. An example of a typical 30-year fixed rate mortgage with a 0% down payment is as follows: a loan amount of $240,000 with a note rate of 6.375% with an APR of 6.421% would result in a monthly principal and interest payment of $1,497.29. The stated monthly payment amount does not include taxes or insurance costs. Your actual monthly payment will also include amounts for real estate taxes, homeowner's insurance premiums, and/or Private Mortgage Insurance (PMI), therefore your payment amount will be higher than the example given. Additional property and borrower eligibility restrictions may apply; contact us for details. Third-party charges, origination fees, points, and interim interest may apply. Closing cost credit of $500 is provided to First-Time Homebuyers only. Terms and conditions are subject to change at any time without prior notice. The interest on the portion of the loan that exceeds the value of the dwelling is not tax deductible and the consumer should consult their tax advisor. NMLS # 419530}