Last month, a friend called me in a panic. She’d found a house she loved but was convinced she couldn’t buy it because she only had 7% saved for a down payment. She’d read somewhere that 20% was mandatory. I told her to call a lender. Two weeks later, she was under contract with an FHA loan, putting 3.5% down. That misconception cost her nothing but worry—this time. But I’ve watched others lose houses, waste years, and pay thousands extra because of myths like these.
Home buying myths are stubborn. They get passed around at dinner parties, repeated on social media, and sometimes even whispered by real estate agents who should know better. The problem is that these myths keep qualified buyers on the sidelines and push others into bad decisions. Let’s kill a few of the most damaging ones right now.
Myth #1: You Need a 20% Down Payment to Buy a Home
This is the granddaddy of home buying myths. Yes, 20% down lets you avoid private mortgage insurance (PMI) on a conventional loan, and it can make your offer more competitive. But it is not a requirement. Not even close.
Here are the actual down payment minimums for common loan programs:
- Conventional loan: as little as 3% down (for first-time buyers)
- FHA loan: 3.5% down
- USDA loan: 0% down in eligible rural areas
- VA loan: 0% down for veterans, active-duty service members, and some surviving spouses
That last one deserves a special mention. VA loans require no down payment at all, a fact that surprises many veterans and active-duty members (and one of several VA home loan myths that cost veterans thousands). If you qualify for a VA loan, saving for a down payment might be the least of your concerns.
Waiting to save 20% can backfire. In many markets, home prices rise faster than your savings account grows. A $300,000 house with 5% down today might cost $330,000 two years from now—and you’ll need 20% of a bigger number. PMI is an extra monthly cost, but it’s often temporary and can be less painful than missing out on appreciation.
Myth #2: You Need Perfect Credit to Qualify
I’ve met people with 800 credit scores who are terrified to apply for a mortgage because they once had a late payment in college. Let’s clear this up: you do not need perfect credit. You need a score that meets a lender’s minimum, and those minimums are lower than you think.
FHA loans often approve borrowers with scores as low as 580. Conventional loans typically want 620. VA loans? Many lenders approve with scores in the low 600s, though some go lower. There are similar misconceptions about VA mortgages—like the idea that you need a 740 credit score to get one. That’s simply not true.
Instead of waiting for a perfect score, focus on improving what you can. Pay down high-interest debt, keep credit card balances below 30% of your limits, and don’t open new accounts right before you apply. A mortgage broker can often find a lender that fits your current profile while you work on your score for a future refinance.
Myth #3: Buying Is Always Better Than Renting
Homeownership is great. It builds equity, gives you stability, and lets you paint the walls whatever color you want. But it’s not automatically better than renting. That depends on your timeline, your local market, and your life.
If you plan to move in two years, buying could cost you money. Closing costs, agent commissions, and moving expenses add up. On a $300,000 home, you might pay $12,000 in closing costs and another $18,000 in commissions when you sell. That’s $30,000 before you count any repairs or market changes. Unless your home appreciates significantly in that short window, renting might be the smarter financial move.
The break-even point is usually somewhere between three and five years. After that, buying tends to pull ahead. But if your job might relocate you, or you’re not sure about the neighborhood, renting gives you flexibility that a mortgage doesn’t.
Myth #4: You Must Find Your “Forever Home” Right Now
First-time buyers often feel enormous pressure to buy a house they’ll love for the next 30 years. That’s a recipe for paralysis. Most people don’t stay in their first home forever. They buy a starter home, build equity, and move up when their needs change.
A “forever home” might have four bedrooms, a big yard, and a garage workshop. A starter home might be a two-bedroom condo with a shared laundry room. Both are valid. Buying a starter home gets you into the market, builds equity, and gives you options. You can always upgrade later. Waiting for the perfect house often means waiting forever—and paying higher prices when you finally do buy.
Myth #5: VA Loans Are Risky, Slow, or Hard to Get
This myth refuses to die, and it hurts veterans and sellers alike. Some sellers reject VA offers because they’ve heard VA loans take longer to close or require expensive repairs. Some buyers avoid VA loans because they think the rates are higher or the process is a nightmare.
What Sellers Get Wrong About VA Loans
Many sellers believe VA loans take 60 days to close. In reality, they often close in 30 to 45 days, similar to conventional loans. The VA appraisal is thorough, but it’s not a home inspection. It’s designed to protect the buyer from buying a home with major safety issues. If a seller’s home is in good shape, the appraisal is rarely a problem.
None of that is true. VA loans often have lower interest rates than conventional loans. They require no down payment and no monthly mortgage insurance. They’re assumable, which is a huge selling point when rates rise. If you’ve heard that VA loans are a hassle, you’ve likely been exposed to common VA loan myths that cost veterans real money. And if you’re wondering whether a VA loan is even your best option, there’s a helpful breakdown of what type of mortgage is best for veterans that separates fact from fiction.
Myth #6: You Should Wait for the Market to Crash
Every few months, someone tells me they’re waiting for the housing market to crash before they buy. I get it. Buying at the top feels risky. But timing the market is nearly impossible, even for experts.
If you wait for a crash, you might wait years. Meanwhile, rents rise, you build no equity, and you miss out on homes you could have afforded. Even if prices dip, interest rates might climb, wiping out any savings. In 2020, many buyers waited for a crash. Instead, prices soared and rates hit historic lows. Those who bought then are sitting on significant equity now.
The better strategy is to buy when you’re financially ready and you plan to stay put for at least five years. You can always refinance if rates drop later.
Myth #7: You Need to Max Out Your Budget to Get a Good House
Lenders will approve you for more than you should comfortably spend. That’s not a green light to spend it all. Just because you qualify for a $500,000 mortgage doesn’t mean you should buy a $500,000 house.
Ownership comes with ongoing costs that renters don’t face. Budget for property taxes, homeowner’s insurance, maintenance, and repairs. A good rule of thumb is to set aside 1% to 2% of your home’s value each year for maintenance. On a $400,000 home, that’s $4,000 to $8,000 annually. Add in utilities, HOA fees, and the occasional surprise (a new roof, a broken furnace), and that “affordable” payment can quickly become a stretch.
Leave breathing room in your budget. You’ll sleep better, and you’ll be better prepared for the unexpected. A house that doesn’t stress you out is worth more than a house that impresses your friends.