Buying your first home can be an exciting, yet stressful process. Not only do you need to scour through the various real estate listings and hire a real estate professional, but you also need to figure out a way to pay for the home. If you are like most buyers, you need to secure a mortgage to purchase the home.

Unfortunately, many first-time homebuyers feel they cannot qualify for a mortgage because of a few myths they believe. Thankfully, proper understanding, planning, and budgeting can help you secure a mortgage to purchase your first home. Here are a few myths all first-time homeowners should stop believing.

1. Perfect Credit Necessary

One common myth is that you need perfect credit to qualify for a mortgage. Your credit does need to be good, but it does not necessarily have to be perfect.

Of course, the higher your score, the lower your interest rate will be and a lower rate is key if you want a lower mortgage payment.

To qualify for the lowest interest rate possible, a credit score of 760 or higher is necessary. Because you are a first-time buyer, you may qualify for an FHA loan with a credit score of 580 or higher.

Lenders are capable of working with you depending on your situation, so schedule a consultation today to learn about programs designed for your needs.

You can also improve your credit score before you apply for a mortgage. Pay down credit card and loan balances. Also, increasing your credit limits improves your debt-to-net ratio, which can increase your credit score.

2. Large Down Payment Required

Another myth that may deter you from buying a home is the need to have a large down payment. Traditionally, lenders want buyers to put 20 percent down on a home loan. This down payment can equal thousands and thousands of dollars, which most people struggle to save.

Fortunately, a 20 percent down payment is not always required.

As a first-time buyer securing an FHA loan, you may only need a down payment of 3.5 percent.

There are also other programs that you may qualify for.

For example, if you are a veteran, you can secure a VA loan, which does not require any down payment.

USDA loans are an option if you have a lower income and are purchasing a home in a rural area. Backed by the United States Department of Agriculture, a USDA loan offers 100-percent financing, meaning no down payment is required, and loan terms of up to 38 years.

A down payment can be beneficial, though. The more money you are able to pay down on the mortgage, the less you need to finance. If you want the lowest mortgage payment possible, a low interest rate and a large down payment will help.

3. Mortgage Payments Not Affordable

You may also believe paying a mortgage each month is not something you can afford. However, compared to paying rent each month, paying a mortgage on your very own home can actually be more affordable.

Unlike rent, each mortgage payment you make goes toward your home. In addition, your home will most likely increase in value with proper upkeep and periodic updates over time. If you decide to sell your home, you should be able to earn a profit.

Also, paying a mortgage can be less expensive than rent in some states. In Hawaii, you may be better off paying rent due to high property taxes. In most states, including New Mexico, buying a home is more affordable than paying rent.

To begin the process of buying a home, contact Loan Fox Inc. today.