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Carrie Haines

Loan Officer
Movement Mortgage
NMLS ID # 2104841

First-time homebuyer myths debunked

By: Movement Team
May 22, 2024

There are a lot of mortgage misconceptions out there. And we want to make sure you're as prepared as possible, so we compiled a list of common first-time homebuyer myths that we’ll be debunking. Keep reading to learn the truth about becoming a first-time homeowner!

First-time homebuyer myth #1:

You need a 20% down payment.

Sometimes it's true and providing a 20% down payment does have its benefits. BUT, you don't always need to have that much to buy a home. There are several loan options that require less for a down payment, like 3.5%. And there are even some loan types that offer as low as zero percent down for qualified borrowers. Working with your loan officer can help you identify the options you may qualify for.

First-time homebuyer myth #2:

I can choose to pay for private mortgage insurance (PMI).

This is false because your loan type will usually determine whether you have to pay for private mortgage insurance (PMI). Depending on your scenario, you may only be eligible for certain home loan options. Some homeowners may only qualify for home loans that require PMI, and some may qualify for ones that don’t.

First-time homebuyer myth #3:

I can’t buy a house if I have student loan debt.

Student loan debt by itself does NOT hold you back from financing a home. The main thing you'll have to focus on is keeping up with your payments. Showing you're responsible with debt payments can make you look like a good, responsible candidate to lenders and credit bureaus.

 

First-time homebuyer myth #4:

I need a perfect credit score to buy a home.

Even if your credit score isn’t in great shape, this doesn’t have to stop you from buying your first home. At Movement, we actually accept credit scores down to 580 depending ont he loan program. Plus, we have lots of loan programs to help qualified borrowers with less-than-perfect credit like FHA loans. So no matter your financial situation we will try and work with you to find the best option!

First-time homebuyer myth #5:

Any website can give me an accurate credit score for a home loan.

Most websites you can access online don't offer the full story that goes into the credit portion of your mortgage application decision. Those websites often just show you a summarized score from one or two credit bureaus. However, when it comes to credit for a home loan, lenders are usually looking at your FICO score (culminating all three bureaus) and the full credit report, not just the score. So, your lender will likely tell you something different than what you saw online yourself.

First-time homebuyer myth #6:

All first-time homebuyers can get a grant or special program.

Unfortunately, this is not the case for all first-time homebuyers. While there are many grants or special programs for those individuals, they may not always apply to everyone buying a home for the first time. Qualifications for programs can vary by state, loan type or even location. However, check with your loan officer first to see what may be available for your situation!

First-time homebuyer myth #7:

My monthly payment will be what I saw online.

The only way to know exactly what your payment will be is to go through the application process. The mortgage calculators you see online really just offer estimates. There are several factors that play into giving you an accurate payment amount that may not be plugged into those online calculators. Luckily, Movement's application takes moments to do online and strives to give you that answer within six hours* of your completed mortgage application.

*While it is Movement Mortgage's goal to provide underwriting results within six hours of receiving an application, extenuating circumstances may cause delays outside of this window.

First-time homebuyer myth #8:

Lenders don't care where my cash deposits come from.

Lenders want to know that the money you have is actually yours. If you have multiple deposits on your account statements that aren't verified places of employment, it can look a bit strange. Make sure, if you have multiple deposits, that you can offer reasonable explanations of where they're coming from.

First-time homebuyer myth #9:

I need to come up with the down payment on my own.

Many loan types allow gift funds from a family member that can go toward a down payment! The only caveat is that they need to fill out a letter verifying that it's a gift for your down payment and you're not expected to pay back (aka, another loan). Individuals outside of your family can become gray areas when gifting you funds, but that's what your Movement loan officer is there for.

First-time homebuyer myth #10:

I can put my whole down payment on my credit card.

Credit card charges are essentially seen as multiple small loans. It doesn't look very responsible to lenders if you're trying to put your down payment on a credit card: it can be a major red flag. A down payment is seen as a good faith effort and agreement that you are a responsible borrower and will be able to keep up payments for the massive amount they just agreed to lend you.

First-time homebuyer myth #11:

Multiple credit pulls will hurt your score.

In general, these multiple pulls should not hurt your score. If you're shopping around with different lenders that are all pulling your credit score to give you an estimate, credit bureaus will notice that reasoning. Therefore, your credit score shouldn't drop due to this. However, if you're shopping around with upward of six to eight lenders, they may start raising an eyebrow. Also, if you're pulling credit for lots of other reasons outside of lenders, that could start to look questionable as well.

First-time homebuyer myth #12:

It’s cheaper to rent than owning a home.

Yes, renting may seem like the cheaper or better option for the short term, but if you’re planning for more long-term, owning a home can actually be a better option. When you buy a home, you’ll have monthly mortgage payments, but unlike rent, these payments will be stable. Rent can rise annually, so you might not always be paying the same amount every time. Plus, owning a home helps to builds your personal wealth instead of your landlord's.

First-time homebuyer myth #13:

All lenders are the same.

This probably couldn’t be farther from the truth. You have traditional lenders and then you have Impact Lenders (aka, Movement). We give back 40-50% of our profits to help communities around the world. When you work with Movement, you get to help make that impact. Plus, we offer specific loan programs to help qualified first-time homebuyers find their dream home.

First-time homebuyer myth #14:

Down payments are the only upfront cost.

There are actually other costs you should prepare for when buying a home on top of your down payment. One of those is your closing costs. These are typically 3-5% of the purchase price of your home. But don’t panic if you don’t have enough saved up for both; Movement Boost can help qualified borrowers finance their entire 3.5% FHA down payment and even an additional 1.5% for closing costs*

*Down payment assistance is in the form of repayable second lien with a 10 year amortization term and a rate at 2% above the first lien rate. Additional restrictions apply.

Don’t let these myths stand in your way

Now that we’ve cleared up common myths about becoming a first-time homebuyer, we hope you feel more prepared to purchase your first home.

Ready to see what you qualify for now? You know what to do: Contact your local Movement loan officer today!

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Author: Movement Team

About Movement Mortgage, LLC (“Movement”)

Movement is not just a mortgage company – they’re an Impact Lender and force for positive change. With more than 4,000 teammates across all 50 states, they reinvest the majority of our profits back into the communities they serve. Movement is the 10th ranked top-producing residential mortgage company in the U.S., funding more than $20 billion in residential mortgages annually. The company has contributed nearly $400 million to the Movement Foundation since 2012, funding the Movement Schools network, affordable housing projects and global outreach efforts. For more information on Movement and Impact Lending, visit movement.com/impactreport .

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Carrie Haines
Loan Officer
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NMLS # 2104841

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