Plenty of would-be buyers rule themselves out of homeownership before they ever talk to a lender. Often the reason is something they heard from a friend, read online years ago or simply assumed. Let’s sort out a few of the most common misconceptions.
This is probably the biggest one. Twenty percent down has advantages, like avoiding private mortgage insurance on a conventional loan, but it is not a requirement for most buyers. Depending on your situation:
Our low down payment options page walks through these programs in more detail.
A strong score can help you qualify for better pricing, but you do not need a flawless history to get a mortgage. Different programs are built for different credit profiles, and lenders look at the full picture, including income, debts, savings and how you have handled payments recently. If your score needs work, a loan officer can often point to specific steps that may help in a matter of months.
Rate matters, but it is only one piece of the cost. A loan with a slightly lower rate might come with higher fees or require paying discount points up front. Another might have a higher rate but lower closing costs, which could make sense if you plan to sell or refinance within a few years.
The better question is which loan fits your goals and timeline. Comparing the APR, total closing costs and monthly payment on the official Loan Estimate gives you a clearer view than the rate alone.
They sound similar, but they are not equal. A pre-qualification is usually a quick estimate based on information you provide. A pre-approval goes further: the lender reviews documents such as pay stubs, bank statements and your credit report before issuing a letter. Sellers and agents tend to take a pre-approval much more seriously, and it gives you a more dependable price range.
Month to month, renting can sometimes cost less, especially once you account for maintenance and insurance on a home you own. But rent can rise year after year, while a fixed-rate mortgage keeps your principal and interest steady for the life of the loan. Each payment also builds equity, which renters do not get. Owners may also have potential tax benefits, depending on their situation, so it is worth talking with a tax professional.
Renting still makes sense for some people, such as those who expect to move soon. The point is to compare honestly rather than assume.
Many people delay the first conversation with a lender because they feel unprepared. In reality, that early conversation is often what helps you get prepared. A loan officer can review your numbers, explain which programs might fit and give you a short list of things to work on, whether you plan to buy next month or next year.
General rules only go so far. The best way to know where you stand is to look at your own income, credit and savings with someone who does this every day. Connect with a FLO Mortgage loan officer for a no-pressure conversation about what may be possible for you.
A FLO Mortgage loan officer can walk through your options, run real numbers and help you choose a loan that fits.
This article is for general education and is not a commitment to lend. All loans are subject to credit approval, underwriting guidelines and program availability. FLO Mortgage, Company NMLS #1835856. Equal Housing Opportunity.
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