Five common home-buying myths debunked

Homeownership is a cornerstone of the American dream. However, in today’s economy, achieving that dream can feel more challenging than ever. Misconceptions about buying a home often make the process even more daunting and create unnecessary obstacles. To help homeownership feel more accessible, we’re debunking five common home-buying myths. Even current homeowners might find some helpful takeaways.

MYTH #1: You need a 20% down payment.

Many hopeful home buyers assume they need a 20% down payment to purchase a home. While putting a sizeable amount of cash down can be beneficial, it isn’t required.

If you can’t make a 20% down payment on a conventional loan, you could still qualify. You’ll likely be required to obtain private mortgage insurance (PMI). PMI policies protect lenders in case borrowers fall behind on payments or default. Borrowers often opt to pay monthly PMI premiums until they can remove it from their loan. Other premium payment options include up-front or a combination of up-front and monthly.

Aside from conventional loans, options exist that offer low or no money down for qualifying borrowers, such as Federal Housing Administration (FHA) loans and Department of Veterans Affairs (VA) loans. Additionally, state and local programs are available to help first-time buyers with down payment costs.

Do your research and consult with an experienced loan officer to explore financing options and what you’ll qualify for.

MYTH #2: You need to have excellent credit to qualify for a mortgage loan.

Lots of people buy into the myth that a less-than-excellent credit score dooms their chances of qualifying for a home loan. The truth is, those with average or even poor credit scores can still secure financing. While higher credit scores could factor into securing more favorable interest rates and loan terms, you don’t need flawless credit to buy a home.

Credit score requirements depend on the loan program. Typically, you’ll want a credit score of at least 620 to qualify for a conventional loan. And there are programs available for those with below-average credit. For instance, FHA loans are generally available to borrowers with credit scores as low as 580, and some lenders may accept even lower scores.

If your credit score is below your target, don’t let that stop you from exploring home financing options. Also, you might be able to refinance your mortgage at better terms once your credit score improves.

Myth #3: The 30-year fixed-rate mortgage is always the best option.

While a 30-year fixed-rate mortgage is the most common type of loan, that doesn’t mean it’s the best option for every borrower. For example, if you plan to move or refinance within a few years, an adjustable-rate mortgage might be a better fit because it typically comes with a lower initial rate. Or, if you can afford higher monthly payments, a 15- or 20-year loan might be more ideal since they allow you to build equity quicker and pay less interest over the life of the loan.

Myth #4: You should wait for a drop in home prices before buying.

Since the future is unpredictable, hoping for home prices to reach a certain level can be a frustrating home-buying strategy. Prices are constantly changing and influenced by various factors beyond your control, including inflation, market demand, new home construction, and interest rates. Waiting for that elusive “right time” could prevent you from entering the market altogether. Instead, focus on your finances, career, and life circumstances to determine the best time for you to buy.

Myth #5: Fall and winter are bad times to buy.

Many people think that spring and summer are the best times to buy a home. Housing inventory is often at its peak during these seasons, and it can also be an appealing time to move for families with children that want to get settled into their new home between school years. However, waiting for these months doesn’t mean you’ll get a better deal.

In reality, the housing market is often more crowded with buyers in the spring, which can naturally drive up prices. Buying during the off-season—fall or winter—can give you an advantage. Home prices may be lower, and you’re likely to encounter less competition. Plus, with fewer bids in the market, you’ll have more time to conduct inspections and carefully consider your options before making an offer. Sellers may also be more motivated during fall and winter, allowing you to potentially close the deal and move in sooner than if you waited for the busy season.