Your future homeowner self will thank you for it.
Home buyers can access a wealth of information about the home-buying process before speaking with a real estate agent. Friends, family, and social media all provide plenty of advice. While some guidance proves helpful or well-intentioned, outdated or inaccurate information can also circulate. To clarify common misconceptions, Zillow surveyed 112 loan officers to identify the myths they frequently hear from first-time home buyers. Based on their feedback and insights from other real estate experts, here are the top 15 myths to watch out for—along with the facts to guide you in the right direction.
Myth #1: You need a 20% down payment
Fact: Buyers haven’t needed a 20% down payment to purchase a home for decades—if ever.
The 20% myth ranks as the most common misconception, with 71% of loan officers in our survey citing it. Additionally, 65% reported that borrowers most often ask how much they need for a down payment.
Many home loans allow as little as 3% down, as long as the loan amount stays within the county’s “conforming” loan limit. As of 2024, most counties set this limit at $766,550. Although many buyers put down less than 20%, those using a conventional loan must pay private mortgage insurance (PMI) when their down payment falls below that threshold. To estimate your PMI costs based on your loan and down payment, use a Mortgage Calculator here.
Here’s a quick overview of some loan types with low down payment options:
Loan Options with Low Down Payment Requirements
Several loan programs provide low down payment options:
•HUD/FHA Loans require a minimum down payment of 3.5%. The Federal Housing Administration (FHA), within the U.S. Department of Housing and Urban Development (HUD), insures these loans.
•USDA/RD Loans allow buyers to purchase a home with no down payment. The Rural Development (RD) division of the U.S. Department of Agriculture (USDA) backs these loans.
•VA Loans also require 0% down and primarily serve active-duty and veteran military members. The U.S. Department of Veterans Affairs (VA) guarantees these loans.
•Specialty Loan Programs offer low down payments. For example, Florida’s HUD Homes program allows qualifying buyers using FHA financing to put down just $100.
Each mortgage lender sets its own guidelines, requirements, and restrictions. Speak with a mortgage loan officer to learn more.
Myth #2: Your Pre-Approval Rate is the Rate You’ll Get at Closing
Fact: Mortgage interest rates fluctuate daily. Lenders base pre-approval rates on market conditions, loan amounts, credit scores, property types, and home locations. However, borrowers can’t lock in their rate until they sign a purchase contract.
“At that time, your loan officer can explain your options and help you choose a rate,” says Wesley Black, Manager for Mortgage Originations at Zillow Home Loans℠ in Irvine, California.
Your final rate may be higher or lower than your pre-approval rate. Keep in mind that locked-in rates can expire, so ask your lender how long yours will last.
Myth #3: You Should Wait to Buy a Home Until Prices Drop
Fact: While home prices fluctuate, waiting to buy carries risks.
“Price growth has slowed, but in most areas, prices aren’t likely to fall,” says Zillow® Chief Economist Skylar Olsen. “Even at current prices and mortgage rates, enough buyers exist to sustain the market, while available homes remain limited. Although mortgage rates may decline in the future, predicting exactly when that will happen remains difficult.”
Olsen advises buyers who find a home they can afford and see themselves living in for the long term to move forward with confidence. In popular neighborhoods, waiting may not create a better opportunity later.
Myth #4: Buying is Always Cheaper and a Better Investment Than Renting
Fact: Depending on location, renting can be more affordable than buying. Home prices don’t always increase in a straight line.
In many of the nation’s top 50 metro areas, rent costs less than mortgage payments for comparable homes. However, homeownership offers benefits such as property appreciation, predictable monthly costs, and the potential for generational wealth.
Olsen explains that choosing to rent or buy depends on financial goals, lifestyle, and market expectations. Buyers should evaluate their long-term plans before making a decision.
For more insights, read The Pros and Cons of Renting vs. Buying a House.
Myth #5: Find a Home Before Applying for a Mortgage
Fact: Getting pre-approved before home shopping is a smart move.
This misconception ranks as the second most common question loan officers receive, according to 66% of those surveyed.
Pre-approval helps buyers understand their borrowing limits, allowing them to focus on homes within their budget. If they can’t get pre-approved, they learn what steps to take to qualify.
Myth #6: Buying a Fixer-Upper Always Saves Money
Fact: True fixer-uppers often require extensive repairs, many of which aren’t immediately visible. Even skilled home inspectors can’t see inside walls.
“If you’re considering a fixer-upper, get repair quotes upfront,” says Korenn Meno, a mortgage loan officer at Zillow Home Loans in Seattle. “You’ll need patience, strong financial management skills, and a willingness to invest time—or money—to complete the renovations.”
While a fixer-upper may lead to a home you love, it doesn’t always result in savings. Read How to Find, Afford, and Improve a Fixer-Upper for a deeper look into the process.
Myth #7: You Must Get a Loan from the Lender Who Pre-Approved You
Fact: Pre-approval doesn’t bind buyers to a specific lender.
Shopping around for a mortgage can lead to better loan terms. However, switching lenders after going under contract or completing inspections and appraisals may cause delays. Buyers should discuss lender changes with their real estate agent to avoid complications.
Myth #8: Wait Until You Can Afford a ‘Forever’ Home
Fact: Waiting for the perfect home may mean never buying at all.
In affordable markets, home values continue appreciating, allowing homeowners to build equity that offsets selling costs when upgrading. Buyers should weigh their options carefully instead of delaying their purchase indefinitely.
“Overcommitting to waiting without exploring current options can be a bigger mistake,” Olsen explains. “Housing from older generations will continue entering the market, but financial benefits favor long-term homeownership, especially in a high-rate environment.”
Myth #9: A 30-Year Fixed Mortgage is Always the Best Option
Fact: Adjustable-rate mortgages (ARMs) can sometimes save thousands in interest.
ARMs start with a fixed rate before adjusting periodically. Depending on market trends, they may offer lower overall costs compared to fixed-rate loans.
“Finding the right loan program and term is like picking an outfit,” says Black. “Each buyer has unique needs.”
Myth #10: Student Loans Prevent Homeownership
Fact: Student loans affect mortgage eligibility but don’t automatically disqualify buyers.
Making on-time payments can boost credit scores, while debt-to-income (DTI) ratios influence loan approval. Lenders assess student loan payments like any other debt. Many homeowners successfully balance mortgages and student loans.
For strategies to buy a home while managing student debt, read Can I Buy a Home With Student Loan Debt?
Myth #11: You Must Pay the Seller’s Asking Price
Fact: Home prices are negotiable.
Sellers list homes at their desired price, but buyers and sellers negotiate through offers and counteroffers. Reviewing comparable sales helps buyers determine fair pricing before making an offer.
Myth #12: Only Excellent Credit Qualifies for a Mortgage
Fact: Buyers with less-than-perfect credit can still secure good loan options.
While strong credit helps, lenders consider multiple factors. Half of surveyed loan officers ranked this myth among the top three misconceptions buyers hold.
Those who primarily use cash and avoid credit may struggle to qualify. “Building positive tradelines and using credit responsibly is key,” says Casey Godwin, a mortgage loan officer for Zillow Home Loans.
Myth #13: Fall and Winter Are Bad Times to Buy a Home
Fact: Buying during off-peak seasons can offer advantages.
Spring sees more listings, but that doesn’t mean it’s the best time to buy. Competition often drives up prices, whereas fall and winter may present better deals.
Myth #14: Self-Employed Buyers Can’t Get a Mortgage
Fact: Self-employed individuals can qualify for home loans but need additional documentation.
Lenders require proof of consistent income, including tax returns and invoices. Loan approval follows different guidelines for self-employed borrowers compared to W-2 employees.
For a deeper dive, read How to Get a Mortgage When You’re Self-Employed.
Myth #15: All Lenders Offer the Same Loan Terms
Fact: Mortgage lenders differ in rates, fees, and customer service.
Loan officers say 30% of borrowers falsely assume all lenders operate the same way. Beyond rates, factors like closing timelines, communication methods, and technology tools vary.
Zillow Home Loans provides online tracking for buyers and agents, improving transparency throughout the mortgage process.
Always compare lenders to find the best fit for your needs.
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Thanks to ZILLOW.com for this great article
