Home-Buying Myths That Could Be Holding You Back

Thinking you’re not ready to buy a home yet? Many renters assume the financial barriers are too high, but much of what people believe about mortgages simply isn’t true. Let’s clear up some of the most common myths so you can feel more confident about your path to homeownership.

Myth #1: You Need a 20% Down Payment

The idea that you must put 20% down is one of the biggest misconceptions in real estate. In reality, most first-time buyers put down far less—on average just 8%, according to the National Association of REALTORS®.

Options that make a smaller down payment possible include:

• FHA loans: With a credit score of 580 or higher, you may qualify with as little as 3.5% down.

• Down payment assistance programs: Many state and local agencies (see DownpaymentResource.com and NeighborWorks) offer grants or loans to help cover costs.

• VA, USDA, and Navy Federal loans: Qualified buyers, including veterans, rural buyers, and some government employees, may be eligible for zero-down mortgages.

• Gift funds: Nearly a quarter of buyers get help from family or friends. Just check with your lender—gift rules can vary.

Myth #2: Bad Credit Means No Mortgage

A less-than-perfect credit score doesn’t have to end your homeownership dreams. You still have options:

• FHA loans: Scores as low as 500 may qualify (with 10% down). At 580 or above, the minimum drops to 3.5%.

• Bigger down payment: More cash upfront can help offset a weaker credit profile.

• Co-signers: A trusted family member with stronger credit can help—just remember, they’re equally responsible for the loan.

• Credit check-up: Order free reports at annualcreditreport.com. You might discover errors or outdated information that, once corrected, improve your score.

Myth #3: I Can’t Afford an Agent’s Commission

Buyers often think they must pay their agent directly, especially in light of the NAR settlement. But commissions are always negotiable, and in most cases, the seller is willing to cover the cost of both their own agent and the buyer’s agent.

If you want professional guidance, signing with a buyer’s agent ensures you have someone in your corner—and it usually won’t add to your out-of-pocket costs.

Myth #4: My Bank Offers the Best Mortgage

Your bank may be convenient, but it’s only one option. Credit unions, mortgage companies, and brokers can sometimes beat the rates your bank offers.

• Shop around: Contact multiple lenders to compare offers.

• Consider brokers: They can present you with several loan options at once. Just remember—they’re not obligated to find you the best deal unless you’ve contracted with them.

Myth #5: Preapproval Guarantees a Loan

Preapproval shows sellers you’re serious and financially eligible, but it doesn’t mean you’re guaranteed a mortgage. A loan isn’t final until:

1. The seller accepts your offer.

2. The lender officially approves the loan after appraisal and document review.

3. You’ve signed the closing paperwork.

Preapproval is a strong signal—but it’s only step one.

Myth #6: The Interest Rate Is All That Matters

A low rate sounds great, but it doesn’t tell the whole story. Fees and other costs can add up quickly. That’s why the Annual Percentage Rate (APR) is key.

The APR factors in fees such as loan origination and processing costs, giving you a true apples-to-apples comparison across lenders. Before you sign, review the loan estimate your lender provides—this breakdown shows the full financial picture.

Bottom Line

Homeownership may be closer than you think. By separating fact from fiction, you’ll see that options exist—even if you don’t have a huge down payment or perfect credit. The key is to shop around, know your choices, and avoid letting myths hold you back.

Happy house hunting!

By Kelley Walters (Rewritten Edition) houselogic.com