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Common Mortgage Myths Explained
Many buyers in Southern Maryland delay purchasing a home because they believe they need a 20% down payment. Whether you’re looking to buy in Charles County, Calvert County, or St. Mary’s County, this long-standing mortgage myth keeps qualified buyers on the sidelines every day.
The truth?
Most homebuyers in Southern Maryland do not need 20% down—and in many cases, putting that much down may actually work against your financial goals.
In this guide, we’ll break down:
Where the 20% down myth comes from
Why lower down payments often make sense for Southern Maryland buyers
How mortgage insurance really works
Smarter strategies to buy a home without draining your savings
Myth: You Need 20% Down to Buy a Home in Southern Maryland
This is the most common misconception we hear from buyers across Southern Maryland.
Many people believe:
You won’t qualify for a mortgage without 20% down
Monthly payments will be unmanageable
Mortgage insurance makes buying unaffordable
None of those are automatically true.
Today’s mortgage options allow many buyers to purchase a home with as little as 3–5% down, and in some cases no down payment at all, depending on eligibility.
Why the 20% Down Myth Still Exists
The 20% rule became popular because:
It eliminates private mortgage insurance (PMI)
It reduces lender risk
It sounds financially responsible
But lending guidelines, loan programs, and buyer needs have changed—especially in markets like Southern Maryland where many homes require updates or improvements after purchase.
Cash Is Capital: Why Southern Maryland Buyers Should Think Carefully
One of the most important principles for today’s buyers is simple:
Cash is capital.
1. Buying a Home Isn’t the End of Spending
After closing, most buyers still need money for:
Emergency savings
Furniture and appliances
Repairs or renovations
Septic, well, or HVAC maintenance (common in Southern Maryland homes)
Putting 20% down can leave buyers “house-rich but cash-poor,” which creates unnecessary stress.
2. Southern Maryland Homes Often Benefit From Upgrades
Many homes in Charles County, Calvert County, and St. Mary’s County are older or semi-custom properties. Keeping cash available allows buyers to:
Make immediate improvements
Increase the home’s value
Customize the home to their needs
Using all your savings for a down payment often limits these opportunities.
Mortgage Insurance Isn’t as Bad as You’ve Been Told
Mortgage insurance gets a bad reputation, but most buyers misunderstand how it actually works.
What Is PMI?
Private mortgage insurance protects the lender if a buyer puts less than 20% down. It does not protect the buyer—but it enables homeownership with less cash upfront.
PMI Is Often Affordable
In many cases, PMI may cost around:
$50–$100 per month (varies by loan and credit)
Some buyers also have the option to:
Pay PMI upfront at closing
Remove PMI later once enough equity is built
For many Southern Maryland buyers, PMI is a small trade-off for keeping thousands of dollars in savings.
Down Payment Options Commonly Used in Southern Maryland
Here are realistic options buyers use every day:
Conventional Loans With Less Than 20% Down
3–5% down options available
PMI can usually be removed later
FHA Loans
As low as 3.5% down
Popular with first-time buyers
USDA Loans
Zero down payment
Available in many parts of Southern Maryland
VA Loans
Zero down for eligible veterans and service members
The key is understanding which option fits your situation, not chasing a one-size-fits-all rule.
Equity vs. Liquidity: What Matters More?
Putting 20% down builds immediate equity—but equity isn’t easily accessible.
Equity
Builds over time
Useful long-term
Not liquid in emergencies
Liquidity (Cash on Hand)
Covers unexpected expenses
Allows flexibility
Supports renovations or investments
For many Southern Maryland buyers, liquidity provides more peace of mind than extra upfront equity.
A Smarter Alternative: Pay Extra Toward Principal Later
Instead of putting more money down upfront, some buyers:
Start with a lower down payment
Keep savings intact
Make extra principal payments later
Making even one extra principal payment per year can:
Cut years off the mortgage
Save thousands in interest
This approach offers flexibility without overextending at closing.
30-Year vs. 15-Year Mortgages: Another Common Misunderstanding
A 15-year mortgage often has a lower interest rate—but:
Monthly payments are significantly higher
Affordability becomes tighter
Many Southern Maryland buyers choose a 30-year mortgage for flexibility, with the option to:
Refinance later
Pay extra toward principal when comfortable
Again, there is no universal “best” choice—only what fits your finances.
“Marry the House, Date the Rate”: Should You Trust This Advice?
You’ve probably heard the phrase: “Marry the house, date the rate.”
The idea is that you can refinance later if rates drop. While that can happen, it should never be the plan you rely on.
Important reminders:
No one can predict interest rates
Refinancing costs money
You must qualify again
Rule of thumb:
Only buy a home if you are comfortable with the payment today.
Should You Wait for Rates to Drop or the Market to Crash?
Many Southern Maryland buyers are waiting for:
Lower interest rates
A housing market “bubble” to pop
Historically:
Home values tend to rise over time
Waiting often leads to higher prices
Timing the market rarely works
The best time to buy is when:
You are financially ready
You understand your options
The payment fits your lifestyle
Final Takeaways for Southern Maryland Homebuyers
✔ You do not need 20% down to buy a home
✔ Mortgage insurance is manageable for many buyers
✔ Keeping cash available often makes more sense locally
✔ There is no one-size-fits-all mortgage solution
✔ The right team helps you avoid costly myths
To learn more about overcoming common homebuying myths and unlocking the power of homeownership in Southern Maryland, explore our in-depth buyer resource guide here.
Ready to Explore Your Options in Southern Maryland?
If you’re thinking about buying a home in Southern Maryland, whether in Charles County, Calvert County, or St. Mary’s County, getting clear, honest information is the first step.
