The Truth About Home Loans: Debunking the Top 5 Mortgage Myths

Naje Sayah
Aug 11
5 min read

Updated: Aug 12

Buying a home is one of the most exciting and life-changing milestones you can achieve—but it can also be one of the most intimidating. Unfortunately, much of that fear comes from misinformation.

Over the years, I’ve seen countless buyers hold off on their dream of homeownership simply because they believed a “rule” that wasn’t actually true. They thought they needed to save for years, boost their credit far beyond what was necessary, or wait until their job history looked “perfect.”

At Kingdom Lending, our mission is to remove those barriers. We combine deep industry knowledge with a values-driven approach so you can make decisions with clarity and confidence. And today, we’re busting the top 5 mortgage myths that keep too many buyers on the sidelines.

Myth #1: You Need a 20% Down Payment

Let’s start with the big one. If you’ve been told you need to save 20% of the home price before you can buy, you’re not alone—this is one of the most common misconceptions in real estate.

While there are benefits to putting 20% down—such as avoiding private mortgage insurance (PMI) and lowering your monthly payment—it’s not a requirement.

Here’s the truth:

FHA loans: as little as 3.5% down with credit scores of 580 or higher
Conventional loans: as low as 3% down for qualified borrowers
VA and USDA loans: 0% down for eligible buyers

Example:For a $300,000 home:

20% down = $60,000
3.5% down = $10,500
0% down = $0

If you wait years to save $60,000, home prices could rise, interest rates could change, and you might end up paying more in the long run.

Takeaway: The 20% down rule is outdated. You may be ready to buy far sooner than you think.

Myth #2: You Must Be in the Same Job for Over 2 Years

Another big myth is that lenders require you to have the exact same job for at least two years before approving a mortgage.

What lenders actually look for is income stability, not identical employment history. You can change employers, switch positions, or even enter a new career field—what matters is that your income is reliable and well-documented.

Acceptable income histories include:

Different jobs in the same industry
Time in school or training that relates to your current field
Self-employment (with proper tax documentation)

Example:Let’s say you worked as a teacher for two years and just started at a new school this semester. That’s fine—your career path shows consistency, even if your employer changed.

Takeaway: You don’t need to stay in a job you dislike just to qualify. If your income is steady, you can still get approved.

Myth #3: You Need a Credit Score of 620 or Higher

While 620 is often the minimum for conventional loans, many programs allow for much lower scores.

Here’s the truth:

FHA loans: possible with credit scores as low as 580 (and sometimes lower with a higher down payment)
VA loans: no official minimum score set by the VA—lenders decide their own requirements
USDA loans: flexible credit guidelines, often accepting scores in the low 600s

Of course, a higher credit score can mean better interest rates, but a lower score doesn’t automatically disqualify you.

Quick tips to boost your score before applying:

Pay down credit card balances to below 30% of your limit
Make all payments on time
Avoid opening new credit lines right before applying

Takeaway: Don’t self-disqualify because of your credit score. You may qualify now—and we can also help you improve your profile for even better terms.

Myth #4: You Can’t Get a Mortgage if You Have Student Loans

With student debt at record highs, many buyers assume they’re locked out of the housing market until they pay it off. That’s simply not true.

Here’s how lenders view student loans:They focus on your Debt-to-Income (DTI) ratio, which is your total monthly debt payments (including student loans) compared to your monthly income. As long as your DTI is within the program’s limits—typically under 43% for most loans—you can still qualify.

Even if your loans are in deferment or an income-driven repayment plan, there are ways to calculate a manageable DTI for mortgage purposes.

Example:If your student loan payment is only $150/month under an income-driven plan, that’s much easier to work into your DTI than assuming a standard 10-year repayment.

Takeaway: Student loans don’t automatically block you from buying a home. A skilled mortgage broker can help you find programs that fit your financial reality.

Myth #5: Pre-Qualification and Pre-Approval Are the Same Thing

These two terms are often used interchangeably, but they’re not the same—and knowing the difference can make or break your offer in a competitive market.

Pre-Qualification:

Quick estimate of how much you might be able to borrow
Based on self-reported information
No credit pull or income verification

Pre-Approval:

Involves a full review of your credit, income, and assets
Results in a conditional loan commitment from the lender
Gives you stronger negotiating power with sellers

Example:If two buyers make an offer on a home—one is pre-qualified and the other is pre-approved—the seller will almost always choose the pre-approved buyer because it’s a stronger sign that the deal will close.

Takeaway: If you’re serious about buying, get pre-approved before house hunting. It can give you the edge you need in today’s market.

Why These Myths Stick Around

The mortgage world changes constantly—guidelines, interest rates, and loan products evolve every year. Misinformation spreads when people rely on outdated advice from friends, family, or even professionals who aren’t current on the latest programs.

And because every buyer’s situation is unique, it’s dangerous to apply a one-size-fits-all rule to something as personal as a mortgage.

The Kingdom Lending Difference

As a mortgage broker in Arizona, we aren’t limited to one bank’s programs—we shop multiple lenders to find the best fit for your credit, income, and goals. That means: