For many first-time homebuyers, the mortgage process can seem overwhelming—especially when you’re trying to separate fact from fiction. Misinformation is everywhere, and some of the most commonly believed mortgage myths could be the very thing holding you back from becoming a homeowner. If you’ve been putting off your dream of owning a home because of something you “heard,” this article is here to help clear the air.
Common Mortgage Myths that Scare You Away From Your First Home
Myth 1 You Need a 20% Down Payment to Buy a Home
This is one of the most widespread misconceptions. While a 20% down payment can help you avoid mortgage insurance and reduce your monthly payments, it is not a requirement to buy a home in Canada.
In fact, the minimum down payment is:
- 5% for homes under $500,000
- 10% for the portion between $500,000 and $999,999
- 20% for homes priced over $1 million
Many first-time buyers purchase homes with less than 20% down. Programs like the First-Time Home Buyer Incentive and the RRSP Home Buyers’ Plan can also help boost your down payment savings.
Myth 2 You Need Perfect Credit to Qualify for a Mortgage
While good credit certainly helps, you don’t need a perfect credit score to get approved. Lenders look at your full financial picture including your income, employment history, debts, and savings.
There are also options for buyers with less-than-ideal credit, such as private mortgages or alternative lenders who offer more flexible approval criteria. In fact, improving your credit even slightly can have a big impact on your rate, so don’t assume you’re out of options just because your score isn’t in the 800s.
Myth 3 Getting Pre-Approved Guarantees You’ll Get the Mortgage
Mortgage pre-approval is an important step in the home buying journey, but it’s not a guarantee. A pre-approval shows that you’re likely to qualify based on the information provided, but the final mortgage approval depends on other factors—like the property itself and the lender’s full underwriting review.
It’s also important to avoid making big financial changes after pre-approval (like taking on new debt), as this can impact your final approval.
Myth 4 You Should Always Choose the Lowest Rate
Of course, the interest rate matters but it’s not the only thing you should look at when comparing mortgage options.
The lowest rate may come with hidden fees, stricter terms, or limited prepayment privileges. Sometimes a slightly higher rate with more flexible terms or lower penalties is actually the better long-term choice.
That’s why it’s important to work with a mortgage professional who can explain all the fine print and help you weigh the trade-offs.
Myth 5 Renting is Always Cheaper Than Buying
While renting can be more affordable in the short term, it doesn’t build equity or offer the long-term financial benefits of homeownership. When you own a home, you’re investing in an asset that can grow in value over time.
Owning also offers stability you’re not subject to rent increases or the risk of being forced to move when a lease ends. With mortgage rates still historically low, monthly mortgage payments can be competitive with (or even lower than) rent in many areas.
Myth 6 Self-Employed People Can’t Qualify for a Mortgage
If you’re self-employed or run your own business, you might think that getting a mortgage is out of reach. The truth is, you absolutely can qualify you just need to provide a little more documentation.
Lenders typically want to see two years of income, tax filings, and financial statements. There are also mortgage products specifically designed for self-employed individuals, as well as private lenders who may offer more flexible requirements.
Myth 7 You Can’t Get a Mortgage if You’re New to Canada
This is another mortgage myths that discourages many immigrants from pursuing homeownership. There are mortgage options specifically designed for newcomers to Canada, even if you have a limited credit history.
Lenders may consider other factors, such as your employment, savings, and rental history. With the right guidance, buying a home as a newcomer is not only possible, it can be a smart investment in your future.
Believing these common myths can keep you from making confident, informed decisions about homeownership. The truth is, you have more options than you think, whether you’re a first-time buyer, a newcomer to Canada, or someone working with a modest down payment or credit challenges.
Every situation is different, and speaking with a knowledgeable mortgage broker can help you get clarity, explore your options, and build a realistic path to owning a home.
Want Honest Mortgage Advice?
You don’t need a 20% down payment, perfect credit, or years of renting experience to buy a home. Many of the most common mortgage myths are outdated or just plain wrong. With the right advice and planning, homeownership could be closer than you think.
Don’t let myths hold you back. Contact Niche Mortgages today and speak with someone who can help you explore real options that match your goals and financial situation.