Key Takeaways
- A 20% down payment is not required — many loan programs accept as little as 3%.
- Credit scores below 700 don't automatically disqualify buyers from getting a mortgage.
- Renting is not inherently 'throwing money away' — it makes financial sense in many situations.
- Pre-approval and pre-qualification are different steps with very different weight in the buying process.
- The true cost of homeownership includes ongoing expenses beyond the mortgage payment.
Why Home-Buying Myths Are So Persistent
Misinformation about buying a home spreads easily — from well-meaning relatives to outdated financial advice passed down through generations. For many would-be buyers, these myths don't just cause confusion; they create real barriers, keeping people renting indefinitely while they wait to hit thresholds they may not actually need to reach.
This article fact-checks the most common beliefs that keep buyers on the sidelines. Whether you're considering your first home or returning to the market after years away, understanding what's actually true can help you make decisions based on your real situation rather than inherited assumptions. For a broader look at how buying compares with renting on financial and lifestyle terms, see our balanced breakdown of renting vs. buying.
Myth
You need a 20% down payment to buy a home.
Fact
Many loan programs allow down payments as low as 3% to 3.5%, and some government-backed programs offer zero-down options for eligible buyers.
The 20% figure comes from a real incentive: putting down that amount eliminates private mortgage insurance (PMI) and lowers monthly payments. But it was never a hard requirement. FHA loans are available with 3.5% down for borrowers with qualifying credit scores. Conventional loans backed by Fannie Mae and Freddie Mac offer 3% down options for first-time buyers. VA and USDA loans provide pathways with no down payment for those who qualify. Waiting to save 20% in a rising market can mean paying significantly more for the same home — so it's worth modeling both scenarios rather than assuming you must hit that mark first.
Myth
Renting is throwing money away — buyers always come out ahead.
Fact
Renting and buying each carry real costs and benefits; which makes more financial sense depends on your market, timeline, and personal finances.
Rent payments cover housing — they're not wasted. Meanwhile, early mortgage payments are heavily weighted toward interest, not equity. Add property taxes, insurance, maintenance (typically estimated at 1%–2% of home value annually), and transaction costs on both ends, and buying isn't automatically cheaper in the short or medium term. In high-cost markets, renting can be the more financially sound choice. The right answer depends on how long you plan to stay, local price-to-rent ratios, and your overall financial picture. Our article on the true cost of owning a home goes deeper on this point.
Myth
You need near-perfect credit to qualify for a mortgage.
Fact
Conventional loans typically require scores around 620, and FHA loans may be available to borrowers with scores as low as 580 — sometimes lower with a larger down payment.
Credit score requirements vary by loan type and lender. While a higher score generally unlocks better interest rates, buyers with scores in the 580–679 range are not automatically locked out of the market. What lenders actually evaluate is a combination of factors: credit score, debt-to-income ratio, employment history, and the size of your down payment. If your credit needs work, there are documented strategies — paying down revolving balances, disputing errors on your report, avoiding new hard inquiries — that can improve your profile over 6–12 months.
Myth
Pre-qualification means you're approved for a mortgage.
Fact
Pre-qualification is a preliminary estimate based on self-reported information; pre-approval involves verified documentation and carries significantly more weight.
These two terms are often used interchangeably, but they mean very different things. Pre-qualification is typically a quick, informal estimate of what you might borrow, based on figures you provide without documentation. Pre-approval involves submitting pay stubs, tax returns, bank statements, and authorizing a credit check — and results in a conditional commitment from a lender. Sellers and their agents treat pre-approval letters as a meaningful signal of buyer seriousness. Entering a competitive market with only a pre-qualification letter can put you at a disadvantage.
Myth
The asking price is the final price — there's little room to negotiate.
Fact
List prices are starting points; buyers routinely negotiate on price, repairs, closing cost contributions, and contingencies, depending on market conditions.
Negotiating power varies significantly by local market and inventory levels. In a buyer's market — where supply exceeds demand — there's typically more room to offer below asking, request repairs after inspection, or ask sellers to contribute toward closing costs. Even in competitive markets, negotiation on non-price terms (like inspection contingencies, move-in dates, or included appliances) is common. Understanding current conditions in your target market, with guidance from a licensed buyer's agent, helps you identify what leverage you actually have.
What First-Time Buyers Should Actually Prepare For
Once the myths are cleared away, the real work begins. Buying a home involves a defined sequence of steps — from checking your credit and saving for upfront costs to making an offer and navigating closing. The process is manageable when you understand what each phase actually requires.
Don't Confuse Pre-Qualification with Pre-Approval
Submitting an offer with only a pre-qualification letter can undermine your credibility with sellers in competitive markets. Before you start making offers, obtain a formal pre-approval with verified documentation from a licensed lender. This gives both you and the seller confidence that your financing is grounded in reality, not estimates.
Down payment size is one of the most misunderstood variables. Putting down less than 20% typically means paying private mortgage insurance (PMI), which adds to your monthly costs — but that trade-off may still make financial sense depending on your market and timeline. Our guide to down payments explains how different amounts affect your loan terms, monthly payment, and insurance requirements. And it's worth remembering that the mortgage is only part of what you'll owe — taxes, insurance, maintenance, and HOA fees (where applicable) all factor into the real monthly cost. The homeownership costs hub covers those ongoing expenses in detail.
If you're ready to see the full picture laid out step by step, The Home-Buying Process, Start to Finish walks through every stage from saving to closing in plain language.
3%
Minimum down payment on some conventional loans
Fannie Mae and Freddie Mac both offer 97% loan-to-value programs for qualified first-time buyers, per published program guidelines.
~1–2%
Annual home maintenance cost estimate
A commonly cited industry rule of thumb suggests budgeting 1%–2% of a home's purchase price per year for routine maintenance and repairs.