4 Real Estate Myths That Are Keeping You From Buying a Home

There are four things people believe about buying real estate that simply aren't true. After nearly 30 years helping thousands of buyers close on homes, land, and investment properties, these are the myths I hear the most — and they stop good buyers from even starting the process. Let's break down each one.

Myth #1: You Need a Large Down Payment

You don't need a huge chunk of cash to buy a home. There are several loan programs where you need 5% down or less:

• Conventional loan: 5% down, credit score around 640 or higher, two years of job history. The seller can cover all of your closing costs, which typically run about 3.5% of your borrowed amount, not your purchase price.

• FHA loan: Only 3.5% down, and the seller can pay your closing costs too.

• VA loan: If you're a veteran with an honorable discharge, the Department of Veterans Affairs covers the down payment entirely. You'll still have closing costs, but the seller can pay those as well — meaning you can move into a home with very little out of pocket.

• USDA loan: This is a 100% financing program through the United States Department of Agriculture. There's no down payment at all, though you'll typically need around $1,000 out of pocket to cover a deposit (refunded at closing) and a home inspection. USDA loans have income limits: $119,850 for a household of four or fewer, and up to $158,000 for larger households. As long as you're under that threshold and buying in an eligible area, you may qualify to buy a home with no down payment at all — and no, you don't have to pay that borrowed amount back separately. It becomes your standard mortgage, as long as the home is your primary residence.

Myth #2: You Need a Sky-High Credit Score

Most buyers assume they need excellent credit to qualify. In reality:

• VA loans: 580 credit score or higher

• USDA and FHA loans: 620 credit score or higher

• Conventional loans: Around 640–650 or higher

How to Boost Your Credit Score Before You Apply

If your score needs work, there's a simple strategy that's helped many buyers raise their score 40–100 points in 60 days:

1. List every credit card balance you carry, along with the minimum payment on each.

2. Order them from smallest balance to largest — ignore the interest rate.

3. Pay the minimum on everything except the smallest balance, and put as much extra as you can toward that one until it's paid off.

4. Move to the next-smallest balance and repeat.

This is sometimes called the debt snowball method, and the psychological win of paying off a card completely (rather than chipping away at the highest balance) tends to keep people motivated to keep going.

The other key habit: keep your credit utilization under 30% of your limit. If a card has a $5,000 limit, keep your balance at $1,500 or below. And if you have a small balance you can pay off in full, do it — it has an outsized positive effect on your score.

Myth #3: You Don't Really Own Your House

This one comes up constantly. People point to property taxes and say, "You don't really own it — if you stop paying taxes, they take it." That's true, but it doesn't mean you don't own the home. You do. Property taxes fund things like roads and local infrastructure, and if they go unpaid for two to three years, a municipality can take action — but that's true of essentially every property in the country, not a reason to think ownership is somehow conditional.

It's also worth understanding what's actually included in a mortgage payment, since this is where a lot of confusion starts:

• Principal and interest

• Property taxes

• Homeowner's insurance

• Private mortgage insurance (PMI), if applicable

Understanding PMI (and How to Get Rid of It)

If you don't put 20% down, you'll pay private mortgage insurance — a monthly premium that protects the lender, not you, in case you default. Statistically, buyers who put less than 20% down have historically had higher foreclosure rates, which is why lenders require it.

Here's the difference by loan type:

• Conventional loans: Once you reach 20% equity, you can request that PMI be removed. The lender typically orders an appraisal or broker price opinion, and the premium comes off your payment about 30 days later.

• FHA loans: PMI (technically called MIP, or mortgage insurance premium) does not come off, regardless of how much equity you build. The only way to eliminate it is to refinance into a conventional loan once you have enough equity.

• USDA loans: Follow the same rules as FHA — the insurance premium stays for the life of the loan unless you refinance.

Even with PMI included, the added cost is often smaller than people expect — frequently under $200 a month on a mid-size loan.

Myth #4: You Have to Make a Lot of Money

On a $70,000 annual income, it's realistic to qualify for a home in the $265,000–$270,000 range with a monthly payment under $2,000 — often close to what many people already pay in rent.

If home prices in your immediate area feel out of reach, look at the surrounding suburbs. Growth patterns aren't random — new subdivisions, apartment complexes, and national retailers like grocery chains and home improvement stores tend to follow population data that developers have already researched extensively. Watching where that growth is heading can point you toward more affordable areas that still have the amenities you need.

Is the Housing Market Going to Crash?

It's a common fear, but the numbers tell a different story. Housing market crashes happen when large numbers of homeowners can no longer afford their mortgage payments — historically driven by adjustable-rate mortgages resetting to higher rates combined with broader economic pressure, like the spike in oil prices that contributed to the 2008 downturn. Foreclosure volume today is a small fraction of what it was during that period, which is a meaningfully different set of conditions than what led to the last major crash.

You Can Buy an Investment Property Too

A USDA loan isn't limited to single-family homes — you can also use one to purchase a duplex, triplex, or quadruplex, as long as you live in one unit for at least a year. That means a tenant next door can help cover your mortgage from day one, and after a year, you can move into another home and keep the property as a rental. It's one of the more overlooked ways to start building real estate wealth without a large upfront investment.

The Bottom Line

Homeownership builds wealth in a way renting simply can't. Your payment stays largely stable over time (aside from taxes and insurance adjustments), you build equity as the home appreciates, and historically, real estate has appreciated at roughly 4% per year over the long term. A $300,000 home today could be worth well over $650,000 in 20 years. If you're on the fence, talk to a lender about your specific numbers — the myths above are usually the only thing standing between renting and owning.

Ready to see what you qualify for? Connect with Wayne for a free, no-obligation conversation — he can walk you through your options and connect you with a trusted lender or agent in your area.