Home Buying Myths That Mislead First-Time Purchasers

The 20% figure comes from a real advantage: putting down that amount eliminates the requirement for private mortgage insurance (PMI), a monthly cost added to loans with lower equity. However, it is not a requirement for purchase. FHA loans — backed by the Federal Housing Administration — accept down payments as low as 3.5% for borrowers with qualifying credit scores. Conventional loans backed by Fannie Mae and Freddie Mac offer 3% down options for eligible buyers. VA loans for qualifying veterans and USDA loans for eligible rural buyers may require no down payment at all. The tradeoff is that smaller down payments typically mean higher monthly costs and more interest paid over the life of the loan. See how your down payment shapes your mortgage for a detailed breakdown of those tradeoffs.

Credit score thresholds vary by loan program and lender. FHA loans allow credit scores as low as 580 with a 3.5% down payment, and some lenders extend FHA financing to borrowers with scores between 500 and 579 with a larger down payment. Conventional loans generally require higher scores, often 620 or above, but requirements differ across lenders. A lower score does not mean homeownership is impossible — it typically means higher interest rates and fewer loan options. Improving a score before applying can meaningfully reduce long-term costs, but waiting indefinitely for a perfect score is not always necessary. For more on how credit scores actually work, the article on common credit score misconceptions is a useful companion.

When a lender pulls your credit for a mortgage application, it generates a hard inquiry, which can cause a small, temporary dip in your score. However, FICO and VantageScore models both account for rate-shopping behavior. Multiple mortgage-related inquiries made within a 14- to 45-day window (depending on the scoring model) are typically grouped and treated as a single inquiry. This means comparing offers from several lenders carries minimal additional credit impact beyond the first pull. Avoiding this comparison out of fear is a costly mistake: even a small difference in interest rate can translate to tens of thousands of dollars over a 30-year loan. For more on mortgage qualification myths, including this one, see our dedicated article on the topic.

Both sides of this argument are frequently overstated. In high-cost cities, renting can be substantially cheaper on a monthly basis than carrying a comparable mortgage, leaving renters free to invest the difference. In other markets, buying can cost less per month than renting an equivalent space. The picture also shifts dramatically based on how long you plan to stay: transaction costs at purchase and sale are substantial, and buyers who move within a few years often lose money compared with renting. Homeownership does build equity, but equity is illiquid and home values can fall. Renting is not wasting money — it is paying for a place to live while retaining flexibility. The decision deserves honest analysis of your specific situation rather than adherence to a blanket rule.

In fast-moving markets, some buyers have waived inspection contingencies to make their offers more attractive to sellers. This strategy carries real risk. A home inspection gives buyers documented information about the property's condition — foundation, roof, electrical, plumbing, HVAC, and more. Without it, buyers assume full responsibility for any defects discovered after closing. Some buyers opt for a pre-offer inspection (scheduling the inspector before submitting a bid), which removes the contingency from the contract while still providing information. Others negotiate inspection rights while keeping contingencies. Understanding what these protections actually do is covered in our article on waiving contingencies. The right choice depends on the specific property, market, and the buyer's risk tolerance.

For decades, seller-paid commissions covered both the listing agent and the buyer's agent, creating the impression that buyer representation cost nothing. Following a 2024 settlement involving the National Association of Realtors, the rules changed: buyer's agents are now required to have a written agreement with their clients disclosing compensation before showing homes. While sellers may still agree to cover a buyer's agent fee as part of negotiations, this is no longer a default or guaranteed arrangement. Buyers should understand how their agent is compensated before beginning the search. Our article on the real estate agent's role in a home purchase explains what buyer's agents do and how compensation now works under the updated rules.