Myths run rampant in the mortgage industry, and too often, they keep well-qualified buyers from purchasing their dream homes.

The 20% down rule? A myth.

The W-2 requirement? Another myth.

The no foreclosures or bankruptcies thing? That’s a myth, too.

The truth is a lot of what you hear about the mortgage process is inaccurate. Want to clear the air and get the real skinny on qualifying for a mortgage? Let debunk the industry’s biggest myths now.

Myth 1: You need a 20% down payment.

Though 20% down may allow you to waive mortgage insurance, it’s not a requirement in any way, shape, or form. In reality, down payments vary by loan program. FHA loans require just 3% down, while conventional loans start as low as 5%. If you can qualify for a VA or USDA loan (by being a military member or buying in a rural area) you might have no down payment at all.

Myth 2: Your credit score has to be excellent.

The minimum credit score for some mortgage programs goes as low as 580 — well below the perfect mark of 850. And while your credit score is certainly important (it factors into what loans you’re eligible for, as well as what interest rates you’ll get), you don’t need great or even good credit to qualify for a loan. Lenders look at a variety of financial factors, from your income and monthly debts down to your employment, past rent payments, and more. These will all play a role in your ability to get a mortgage.

Myth 3: You’re ineligible if you’ve had a bankruptcy or foreclosure.

Though a past bankruptcy or foreclosure will delay your homeownership dreams, it won’t dash them altogether. Consumers can buy a home just 3 years after a foreclosure and 2 years after filing for bankruptcy. In some cases, if there are extenuating circumstances like a job loss or medical situation, it could be even sooner.

Myth 4: Your down payment can’t be a gift.

Not all of your down payment needs to come from out of pocket. Though some loan programs require a certain percentage be from your own reserves, many mortgages will allow you to cover your down payment partially (or even fully) with gift money from a parent, friend, or loved one. You’ll just need a letter saying the money is a gift and doesn’t come with any interest attached.

Myth 5: You need a 9-to-5 to qualify for a loan.

Freelancers, contractors, and self-employed people can get loans just like 9-to-5 workers. Of course, they won’t have the typical W-2 forms that a traditional worker would have, but that’s OK. They just need to prove their income differently — through bank statements, past rent payments, recent tax returns, etc. There are also lenders who specialize in providing self-employed mortgage loans, making the process even easier to come by.

Myth 6: You can’t qualify if you still have student loans.

Student loans might make it harder to afford buying a home, but they certainly don’t bar you from it. You can absolutely still qualify for a mortgage with student loans to your name. You’ll just need to 1) have enough income to comfortably cover the costs of your loan payments plus your new estimated mortgage payment and 2) be current on your student loan payments (meaning not late or delinquent.) Payment history (on loans and any credit accounts you have open) plays a big role in your ability to qualify for a loan, as well as what interest rates you get. If you’re behind on payment, get caught up and ensure your accounts are in good standing before you apply for a mortgage.

Myth 7: You’ll save money by not buying a home.

Too many would-be buyers keep renting, thinking they’re “saving money.” In reality, they’re actually just throwing cash down the drain. Think of it this way: when you rent, you’re paying your landlord. They then take the money, pay their own mortgage on the property, and pocket the difference. Later on down the line, when they sell the home, they get all those profits, too. What did you, as the renter, walk away with in the end? Absolutely nothing, unfortunately.

But that’s the long-term picture. What about the here and now? As surprising as it is, in many markets, a mortgage payment is actually more affordable than monthly rent. Considering that rent costs have been rising for steadily for years now (they jumped 3.3 percent since 2017), this trend will likely continue for years to come.

Go Beyond Myths — Here’s How to Buy a Home

Buying a home shouldn’t be thought of as impossible — no matter what your credit, savings, or employment situation might look like. Our Beyond program is designed for unconventional buyers, so if you’re worried you can’t qualify for a mortgage (or never will) contact a loan officer at Embrace Home Loans today. We’ll talk you through your options.