Halloween might come once a year, but the myths surrounding the mortgage process? Those can haunt borrowers all year long. From urban legends about down payments and credit scores to outdated beliefs about who can and can’t qualify for a loan, these spooky misunderstandings can stop people from becoming homeowners before they even start.
For first-time buyers, the fear might come from not knowing where to begin. For self-employed borrowers, it’s the worry that their income won’t count. And for those who faced rejection in the past, it’s the lingering dread that history will repeat itself. But here’s the truth: many of these fears are based on myths—not facts.
So in the spirit of Halloween, we’re exorcising the most persistent (and terrifying) mortgage myths that still scare buyers away from homeownership. Some will make you roll your eyes. Others will surprise you. But all of them will leave you better prepared to face the mortgage process with confidence. Let’s dig in—and don’t worry, there are plenty of treats to go with these tricks.
🎃 Myth #1: If You Don’t Qualify for a Conventional Loan, You’re Out of Options
🧙 Trick: Many borrowers believe that if they don’t fit inside the strict box of conventional guidelines, there’s no hope for financing. Maybe they were turned down by a bank, told their income documentation was too complex, or assumed that without perfect credit, they’d never see a mortgage approval. Rejected once? You must be cursed.
🍬 Treat: Non-QM lending exists for exactly this reason. These programs are built for real-life borrowers with real-life complexities. Whether you’re self-employed, own multiple investment properties, earn income through 1099s, or have unique financial circumstances that don’t align with traditional underwriting models, Non-QM opens new doors. These loans allow you to qualify based on alternative documentation like bank statements, profit and loss statements, asset depletion, or the income potential of a property (like DSCR loans).
Non-QM isn’t subprime—it’s smart, flexible lending designed for today’s diverse borrower base. With the right broker guiding the process, you might be far closer to closing than you think.
Just because one lender says no doesn’t mean everyone will. Non-QM may be your magic wand.
🎃 Myth #2: You Need 20% Down to Buy a Home
💀 Trick: The belief that you must put down 20% has scared off thousands of potential buyers. It’s one of the most persistent myths in real estate and often causes well-qualified buyers to delay their purchase unnecessarily—sometimes for years—while they try to save up an arbitrary percentage.
🍬 Treat: The truth is, there are many ways to buy a home with much less. FHA loans start at just 3.5% down, while conventional loans can go as low as 3% down for qualifying buyers. VA and USDA loans even offer zero-down options for eligible borrowers. And Non-QM programs often accept as little as 10% down, even for self-employed borrowers or those with unique credit or income profiles.
Saving 20% can help you avoid private mortgage insurance (PMI), but it’s not a requirement to get approved. In fact, waiting to hit that number can cost you more in rent and home price appreciation than PMI ever would. Today’s lending landscape offers more flexibility than ever—especially for borrowers who work with brokers who understand the full range of conventional and Non-QM options.
Don’t let outdated advice keep you renting longer than you need to. Homeownership may be more achievable than you think.
🎃 Myth #3: You Must Have Perfect Credit
🦇 Trick: Borrowers often believe they need a flawless credit score to even think about applying for a mortgage. This myth discourages people from exploring their options, especially if they’ve experienced a late payment, collections account, or temporary financial setback in the past. It paints an unrealistic picture of who can become a homeowner.
🍬 Treat: Mortgage brokers know better. While a higher credit score can open doors to the most competitive pricing, it’s far from a hard line in the sand. Many programs accept borrowers with mid-600s credit scores—and in Non-QM lending, that number can go even lower. What matters more is how the full borrower profile stacks up.
Non-QM lenders take a broader view: Do they have strong reserves? Significant equity? Stable income even if the credit score took a temporary hit? Brokers working with the right Non-QM partners can find financing solutions for clients with recent credit events, thin files, or recovering financial histories.
This is where you, the broker, bring real value. You can separate myth from reality for your clients—and show them that their score doesn’t define their entire story.
Don’t let one score define your borrower’s future. There’s more to the story—and more ways to win the deal.
🎃 Myth #4: You Can’t Get a Mortgage if You’re Self-Employed
😱 Trick: Self-employed borrowers often think they’re unlendable because their income is complex or inconsistent on paper. Many assume that without W-2s or traditional pay stubs, they’ll automatically be denied. This misconception causes a huge portion of qualified borrowers to avoid even applying.
🍬 Treat: As a mortgage broker, you know this isn’t true—and it’s one of the most important conversations you can have with your clients. The truth is, Non-QM lending is built for this exact situation. Whether your client runs an LLC, files a Schedule C, works on a 1099, or earns inconsistent income as a freelancer or contractor, there are Non-QM programs that can help them qualify.
Bank Statement loans (using 12 or 24 months of deposits), P&L-only programs (CPA-prepared or borrower-prepared), and 1099-only options are all designed to verify income based on real-world cash flow, not just tax returns. These loans empower you to serve a high-value, often underserved segment of the market—and close deals that traditional lenders would pass on.
This is your opportunity to position yourself as the go-to broker for entrepreneurs and small business owners. With the right Non-QM partner, you can offer fast turn times, flexible documentation, and competitive terms that help this group of borrowers build wealth through real estate.
Running your own business shouldn’t disqualify you. It just means you need a broker who can connect you with common-sense solutions.
🎃 Myth #5: Pre-Approval Means You’re Locked In
🦹 Trick: Some borrowers fear that once they’re pre-approved, they’re locked into one lender, one loan product, or one rate. This misconception leads to hesitation and a reluctance to take the first step, especially in a market where rates and terms can shift quickly.
🍬 Treat: As a broker, it’s important to educate clients that pre-approval is not a binding commitment—it’s a snapshot of buying power. It gives borrowers the confidence to shop seriously, but it doesn’t prevent them from comparing programs, rates, or even switching lenders if a better solution emerges. Especially in the Non-QM space, pre-approvals are a vital tool for setting expectations but should be framed as flexible and adaptable.
Use pre-approvals as an opportunity to deepen trust: explain what the letter does (and doesn’t) mean, walk them through next steps, and emphasize that you’re their advocate—not a gatekeeper. If another lender can beat the terms, great—you’ll help make the transition smooth. If not, you’ve reinforced your value as a transparent, client-first advisor.
Think of pre-approval as your borrower’s costume rehearsal—important for preparation, but not the final act. You’re there to direct the full performance.
🎃 Myth #6: You Can’t Buy in a High-Rate Market
💩 Trick: High interest rates have scared many buyers into staying on the sidelines. Brokers often hear buyers say, “We’re just going to wait for rates to drop,” even when they’re financially ready and otherwise qualified to buy now.
🍬 Treat: As a broker, this is your chance to flip the narrative. Yes, rates are higher than they were during the ultra-low pandemic-era period—but that doesn’t mean it’s a bad time to buy. In fact, serious buyers today face less competition, more room to negotiate with sellers, and opportunities to leverage creative financing.
Help your clients understand their options:
- Use temporary and permanent rate buydowns to ease monthly payments
- Offer adjustable-rate mortgages (ARMs) for short- to mid-term ownership strategies
- Tap into closed-end second liens to preserve low first-lien rates while accessing equity
- Show how a refinance strategy can work once rates stabilize or drop
Position yourself as a strategic advisor, not just a rate quote machine. Your job is to help clients make smart decisions today with a long-term plan for tomorrow.
Waiting for the “perfect” rate might cost your borrower the perfect property. Help them act with confidence—and a plan.
🎃 Myth #7: Renting Is Always Cheaper Than Owning
🩸 Trick: This myth keeps renters stuck, believing they can’t afford to buy—and it’s one brokers hear all too often. Many renters compare their current monthly rent to a hypothetical mortgage payment and assume ownership is out of reach.
🍬 Treat: While mortgage payments may sometimes be higher upfront, homeownership offers long-term financial benefits that renting can’t match. As a mortgage broker, it’s your job to help clients understand the bigger picture. Homeowners gain equity with every payment, lock in their monthly costs (unlike rent, which can rise year after year), and benefit from tax advantages and appreciation over time.
You can also show renters options that challenge their assumptions:
- Low down payment programs that reduce upfront barriers
- Non-QM solutions like bank statement loans or DSCR products for gig workers or investors
- Buydowns or ARMs that offer lower initial payments
- Long-term equity projections that make the cost of ownership more tangible
Position yourself as the expert who helps renters become owners—even if they think they’re not quite ready. Break down the numbers. Challenge the myth. And guide them toward building wealth.
Renting is paying someone else’s mortgage. Buying is investing in your client’s financial future—and you’re the one who helps them get there.
🎃 Bonus Myth: A Past Foreclosure or Bankruptcy Means You’re Disqualified Forever
🍯 Trick: Borrowers who went through tough times often assume they’ll never qualify again—and that fear keeps them from even starting the conversation.
🍬 Treat: As a mortgage broker, this is where your value shines. Most conventional and government-backed loan programs have well-defined seasoning periods after bankruptcy, short sales, or foreclosure—typically 2 to 7 years depending on the program. But Non-QM programs? That’s where flexibility kicks in.
Many Non-QM lenders will work with borrowers just one day out of a credit event, especially if there’s a strong compensating factor like a large down payment, high reserves, or verifiable income stability. Others may offer solutions for borrowers currently in a repayment plan or with a recent re-establishment of credit.
Help your clients see the light at the end of the tunnel:
- Walk them through seasoning requirements by loan type
- Showcase Non-QM products tailored for credit events
- Reframe their narrative from “I’ve been denied” to “I’m ready for a new start”
These borrowers are often motivated, financially recovered, and simply need a second chance. Be the broker who helps them stop self-selecting out of homeownership and start seeing what’s possible.
Your borrower’s past doesn’t have to haunt their future—and you can be the one to help them move forward.
Final Thought: Don’t Let Myths Scare Your Clients Away From Homeownership
The mortgage process can feel spooky—especially for borrowers navigating a haunted house of misinformation. But as a mortgage broker, you have the tools, expertise, and product variety to help them face the unknown with confidence.
Whether it’s busting outdated beliefs about credit, educating renters on ownership benefits, or helping self-employed borrowers find flexible Non-QM options, your role is to guide them out of fear and into financial empowerment.
Don’t let mortgage myths steal your clients. Be the truth-teller, the myth-buster, and the trusted guide.
Happy Halloween—and here’s to fearless, informed borrowers and brokers building business on a rock-solid Foundation. 🎃
