REGION – Homebuyers have access to a wealth of information about the homebuying process before they even begin talking to a real estate agent. Friends and family, social media – everyone has a lot to offer. While much of this guidance can be solid or well-intentioned, some of it may be outdated or inappropriate for your situation.
Myth 1: You need a 20% down payment.
A 20% down payment hasn’t been required to buy a home for decades, if ever. The 20% myth topped the list of misconceptions cited by 71% of the loan officers in our survey, while 65% of those surveyed said borrowers’ most frequent question was about how much of a down payment was needed to buy a home.
Many home loans allow a down payment as low as 3%, as long as you’re borrowing less than the so-called “conforming” loan limit for the county where the home you want to buy is located. The limit for most counties is $806,500, as of 2025. Although down payments of less than 20% are common, keep in mind you will need to pay private mortgage insurance (PMI) on a conventional loan if you put down less than 20% of the home’s purchase price.
All mortgage loans are subject to the lender’s guidelines, requirements and restrictions. Ask your mortgage loan officer for details.
Myth 2: Your preapproval rate is the rate you’ll get when you close.
Interest rates adjust daily. The rate you’re quoted when a lender preapproves you for a mortgage is based on current market conditions, as well as factors like your loan amount, credit score, property type, and where the home is located. In general, your actual rate can’t be “locked in” until you find a home and sign a purchase contract with the seller.
Your locked-in rate may be higher or lower than your preapproval rate. But be aware that locked-in rates can expire, so you should ask how long yours will last.
Myth 3: You should wait to buy a home until prices are lower.
Buying a home after a big run up in prices may seem risky, but waiting carries risks as well.
“Price growth is soft for sure, but for a vast majority of areas, prices aren’t likely to fall,” says Zillow chief economist Skylar Olsen. “There are simply enough buyers, even at these prices and mortgage rates, and not enough homes listed for sale. And while mortgage rates should move a bit below where they are now in some distant future, myself and other experts keep putting off when we expect that to happen. If buyers find themselves able to find and win a home they’d like to commit to for the long run, and are able to afford it, they can feel comfortable moving forward. In popular neighborhoods, we cannot necessarily promise a more friendly time to buy in the future.”
Myth 4: Buying a home is always cheaper and a better investment than renting.
Depending on where you live, renting a home can be cheaper than buying one, and home prices don’t always go up and up in a neat, straight line.
Rents and mortgage payments are much closer than they have been in the past, and, in a majority of the nation’s top 50 metros, rents are cheaper than mortgages – even for a comparable home. However, a home you own is an asset that can appreciate over time, provide a relatively stable monthly cost, and create generational wealth.
Olsen says there are benefits to each option. How the math works out for any individual depends in part on what you expect from the market, how long you expect to live in the home, and what kind of lifestyle you’re looking for.
Myth 5: You should find a home before you apply for a home loan.
Getting prequalified for a loan before you shop for a home is not just okay, it’s smart. This myth is a pervasive one, with 66% of loan officers in our survey citing it as the second-most-common question borrowers ask them.
Once you’re prequalified or preapproved for a mortgage, you’ll have an idea of how much you can borrow to buy a home. Then you can shop for homes in your price range, and you won’t fall in love with a home outside your budget. If you’re not able to get preapproved, you’ll find out what you need to do to position yourself so that you can.
Myth 6: Buying a fixer-upper will save you money.
True fixer-upper homes need a lot more than a fresh coat of paint. These homes generally have major problems, some of which may not be visible. Even a skilled home inspector can’t see inside walls.
“If you’re looking into a fixer-upper, you should get quotes on the repairs needed beforehand,” says Korenn Meno, a mortgage loan officer at Zillow Home Loans in Seattle, Wash. “You’ll have to be patient, good with finances, and willing to sacrifice all your spare time to work on your home, or pay someone to get your home fixed up.”
You may end up with a home you love, but you probably won’t save money with this strategy.
Myth 7: You have to get your loan from the lender who preapproves you.
A pre-approval is a great starting point for getting a mortgage, but you’re not obligated to stay with that lender. You can shop around for a lender that makes a competitive offer and is a good fit for you.
Keep in mind that it’s best practice to shop for a lender before you go under contract or lock in a rate. Once you are under contract and have completed inspections and appraisals, it’s usually not a good idea to shop around for a new lender. If you do, you will need to notify the seller’s agent of the change. Any delays or changes could put you at a higher risk of getting your offer rejected by the seller.
Myth 8: You shouldn’t buy until you can afford your “forever” home
Selling a home can be costly, but if you wait to buy until you can afford your “forever” home rather than buy a lower-cost “starter” home, you may never buy at all.
Or, in the relatively more affordable markets where appreciation is still happening, you may miss out on years of equity-building that could offset your selling costs when you trade up to your forever home.
Caveat: Considering a home you already know that you’ll outgrow in the very near future? It may make sense to wait until you find a home where you can stay for at least five or more years.
Myth 9: A 30-year, fixed-rate mortgage is always the best choice
Depending on rate movements, adjustable-rate mortgages (ARMs) can save thousands of dollars of interest over the life of the loan compared with a fixed-rate. ARMs have an initial fixed-rate period, and then can adjust up or down, resulting in monthly payments that can change over time.
This misconception was cited by 16% of the loan officers in our survey as one of the top 10 questions they hear from borrowers. ARMs aren’t a fit for everyone, but for many, they are worth considering.
Myth 10: You can’t buy a home if you have student loans.
Student loans can both help and hurt your chances of buying a home. The potential help comes from boosting your credit scores, if you make your payments on time. The potential hurt comes from raising your debt-to-income ratio, or DTI, which is a factor in loan approval. Student loans are not an automatic barrier. They’re just another form of debt that’s part of your DTI calculation. Many people have student loans and a home mortgage.
Myth 11: You have to pay the seller’s asking price to buy a home.
The seller’s asking price is the amount the seller hopes you’ll pay, but it’s not necessarily the price you’ll actually pay.
This may seem obvious, but home prices are typically negotiated with offers and counteroffers until you and the seller agree on a price. Be sure to ask your agent for “comps” for a home you’re interested in – this is a report of prices of recently sold, similar homes nearby – in order to draft a competitive offer or understand whether the listing price fits in your budget.
Myth 12: You need excellent credit to buy a home.
Good home loans and attractive rates are available for people with less-than-perfect credit, as well as those with excellent credit. This is likely to come as news to a lot of borrowers, since half of the loan officers surveyed cited it as the third-highest misconception among prospective buyers.
Who can’t qualify? People who develop a habit of always paying cash for their purchases. “Establishing positive tradelines and using credit responsibly is what we’re looking for,” says Casey Godwin, a mortgage loan officer for Zillow Home Loans in Overland Park, Kan.
Myth 13: Fall and winter are bad times to buy a home.
Fall and winter can be advantageous times of the year to buy a home. Spring is sometimes called the “homebuying season,” because many families prefer to move when their children are out of school for the summer. That doesn’t mean you have to buy in the spring, or that you’ll pay less if you do.
Myth 14: You cannot buy a home if you are self-employed.
Nearly one-fourth of loan officers surveyed said this was a common misconception among borrowers. You absolutely can buy a home if you’re a self-employed freelancer, gig worker, or business owner. But the rules for getting a mortgage are different for those who receive a W-2 from an employer and those who receive a 1099-NEC, which reports nonemployee compensation.
Lenders will generally require more documentation of income if you’re self-employed, including recent invoices and proof of a steady income over a longer period of time. To learn more about what might be required, read this guide to getting a mortgage when you’re self-employed.
Myth 15: All lenders are the same when buying a home.
Getting a mortgage is more than an exercise in rate shopping, and there are significant differences among lenders when it comes to the customer service, the ability to close on time, and the fees attached to their loans.
Nearly one-third of loan officers surveyed (30%) say borrowers falsely believe that all lenders are equal. While getting the best interest rate is rightfully a top concern for homebuyers, most lenders offer a variety of competitive rates and loan products. However, fees can vary widely, and some lenders have a better track record for closing on time, communicating regularly though buyers’ preferred methods, including text and email, and making things easier on borrowers with technology to keep the process moving smoothly through closing. Check out a variety of lenders to find the one that works best for you.
Article provided by Zillow Group.