8 Homebuying Myths That Could Be Holding You Back—Debunked by a Realtor

As a Realtor who’s helped hundreds of families buy homes over the past decade, I’ve heard nearly every myth about homebuying—and I’ve seen how believing the wrong thing can delay or derail your dreams.

Let’s clear the air by tackling eight of the most persistent myths with facts and insight, so you can make smart, informed decisions on your journey to homeownership.

Myth 1: You Need 20% Down to Buy a Home

Reality: You don’t need 20% down to buy a home—in fact, most people don’t. There are several loan programs that allow for much lower down payments:

• FHA loans: 3.5% down
  
  

• Conventional loans: 3–5% down for first-time buyers
  
  

• VA loans: 0% down for eligible veterans and service members
  
  

• USDA loans: 0% down for qualifying rural areas
  
  

While putting 20% down helps you avoid private mortgage insurance (PMI) and may offer lower monthly payments, it’s not a requirement. Focus on what makes financial sense for your situation, not arbitrary numbers.

Myth 2: Your Down Payment Is the Only Cost

Reality: Your down payment is just one part of the upfront costs. Buyers should also prepare for closing costs, which typically range from 2% to 5% of the purchase price. These include fees for the appraisal, title search, loan origination, and more.

You may also need:

• A home inspection, usually $300–$600
  
  

• Earnest money (1–2% of the purchase price, held in escrow)
  
  

• Potential costs for buyer agent commissions in light of industry changes
  
  

It’s possible to negotiate seller credits, but don’t depend on them. Being financially prepared upfront gives you more negotiating power and peace of mind.

Myth 3: You Need Perfect Credit to Qualify

Reality: While a higher credit score can help you secure better rates, you do not need perfect credit to buy a home. FHA loans accept scores as low as 580, and conventional loans may be approved around 620.

Credit score is just one factor. A borrower with a modest score but strong income and low debt could qualify more easily than someone with an excellent score but high obligations. Work with a lender to understand your unique situation—there’s often more flexibility than you think.

Myth 4: Self-Employed? No Mortgage for You

Reality: Self-employed buyers can absolutely qualify for mortgages—it just requires more documentation. Lenders will usually ask for:

• Two years of personal and business tax returns
  
  

• Profit-and-loss statements
  
  

• Business bank statements
  
  

Consistency and stability matter more than W-2s. If you’ve run a successful business for at least two years and can demonstrate steady income, you’re a strong candidate for financing.

Myth 5: Pay Off All Debt Before You Buy

Reality: Paying off debt can help—but eliminating every balance isn’t always the best move. Why? Because mortgage lenders look at your debt-to-income ratio (DTI) more than total debt.

For instance, a large loan with a low monthly payment may have minimal impact on your DTI. Instead of draining your savings to pay off big loans, focus on:

• Reducing or eliminating high-interest credit card debt
  
  

• Keeping cash reserves for your down payment, moving costs, or emergencies
  
  

Keeping manageable debt and cash on hand is often more strategic than going debt-free.

Myth 6: Don’t Buy If You’ll Move in a Few Years

Reality: Buying doesn’t have to be a forever decision. In many markets, you can build equity quickly—especially if home values are rising.

Other options include:

• Turning the home into a rental if you move
  
  

• Selling in a few years with enough appreciation to cover costs
  
  

If you're financially prepared and the numbers make sense, a shorter stay doesn’t necessarily mean buying is a bad choice.

Myth 7: Renovations Always Add Value

Reality: Not all renovations result in higher home value. Some upgrades are viewed as personal preferences, not investments.

For example:

• Removing a garage or adding highly customized features can actually hurt resale value
  
  

• Partial upgrades (like new countertops with old cabinets) may offer minimal return
  
  

• Basic maintenance (like painting) is often expected, not value-enhancing
  
  

Before investing in major renovations, speak with a Realtor or appraiser to see if they’ll pay off in your market.

Myth 8: Your Mortgage Payment Will Never Increase

Reality: Even with a fixed-rate mortgage, your total monthly payment can rise over time.

Why? Because property taxes, homeowners insurance, and HOA fees can increase annually. Also, if you’re paying PMI, your payment may decrease once it’s removed—but that doesn't happen automatically. You’ll need to request it after reaching the required equity.

Always budget a little extra cushion for future increases in your housing costs.

Final Thoughts

Don’t let myths stop you from achieving your dream of homeownership. The truth is, you have more options—and flexibility—than you might realize. Whether you’re a first-time buyer or getting back into the market, the best thing you can do is get informed, partner with a trusted professional, and move forward with confidence.

The path to homeownership starts with clarity—not confusion.