"I Can't Buy a House" — Think Again: How to Overcome the 3 Biggest Hurdles
- Wayne Turner
- Jul 21
- 6 min read
Updated: Jul 23
"I Can't Buy a House" — Think Again
I hear it all the time: "Wayne, I can't afford a house." And almost every time, when we sit down and talk it through, it turns out they can. They just didn't know how.
There are really only three things standing between most people and a house: the down payment, your credit, and closing costs. That's it. Let's knock out all three, right now.
Hurdle #1: The Down Payment
Here's something a lot of people don't realize — buying a house does not have to cost you a lot of money up front.
There's a loan program called USDA, which stands for United States Department of Agriculture. Don't let the name fool you. It's not just for farms or land way out in the country. USDA loans cover a lot of suburban areas too, and it's a 100% financing loan — meaning no down payment at all.
Now, I know what some of you are thinking. "Wayne, didn't 100% loans cause the 2008 crash?" No. Those were a completely different animal, sometimes called "ninja loans" — no income, no job, no asset — handed out to people with credit scores in the 500s with little to no verification. That's not what we're talking about today. Today's programs still require you to prove your income, your job, and your credit.
Here's my simple rule of thumb: if you've got $1,000 saved and a credit score of 620 or higher, you're in a position to buy a house.
If your score isn't quite there yet, here's a trick that works. Sit down with a pen and paper and write out everything you owe — medical bills, student loans, car payments, and every credit card balance. Line them up from the smallest balance to the largest. It has nothing to do with interest rates. Then pay the minimum on everything except the smallest balance, and throw every extra dollar you can at that one until it's gone. Once it's paid off, roll that same extra money into the next smallest balance, and keep going. This is often called the "debt snowball," and it can boost your credit score meaningfully in as little as a month or two.
Once your score is where it needs to be, here's what your down payment options look like:
USDA loan — 0% down
VA loan (for veterans) — 0% down, and credit scores as low as 580 may qualify
FHA loan — 3.5% down
Conventional loan — as little as 5% down
You do not need 20% down to buy a house. That's an old myth that keeps a lot of good buyers on the sidelines.
A Quick Word on FHA vs. Conventional
Both FHA and conventional loans let you buy with a small down payment, but there's an important difference: private mortgage insurance, or PMI.
With an FHA loan, you'll pay mortgage insurance for the life of the loan unless you refinance into a conventional loan later. With a conventional loan, that mortgage insurance automatically drops off once you reach 20% equity in your home — through a combination of paying down your balance and your home's value going up over time.
So if you can put down at least 5%, a conventional loan may save you money down the road. If a low down payment (like FHA's 3.5%) is what makes home ownership possible for you right now, that's a completely valid path too — just know you may want to revisit refinancing once you build equity.
Hurdle #2: Your Credit
We already covered the debt snowball trick above — that's your best tool for a quick credit boost. The other big piece of advice here is simple: once you decide you're buying a house, stop adding new debt. Don't open new credit cards, don't finance furniture, don't buy a car on credit. I've seen buyers get approved, find a house, get through inspection, and then torpedo their own closing by putting a big purchase on a credit card right before closing day. Keep your credit picture as clean and stable as possible from the moment you start this process until the day you get your keys.
Hurdle #3: Closing Costs
Closing costs typically run around 3.5% of your loan amount — not your purchase price. (If you're doing a 100% loan, those are the same number. If you're putting money down, your loan amount is lower than your purchase price.)
Here's the good news: closing costs are very often paid by the seller, negotiated right into your purchase contract. When that happens, it's essentially a credit at closing that covers your costs, which means you can walk into home ownership with very little cash out of pocket.
You will still want to put down an earnest money deposit when you write an offer — it shows the seller you're serious. A good minimum to plan for is around $500, and in most cases that deposit is refundable if the home doesn't pass inspection or if your financing doesn't come through, depending on the contingencies in your contract.
Before You Do Anything Else: Get Pre-Approved
This might be the single most important piece of advice in this whole post: do not go look at houses, and definitely don't write an offer, before you've talked to a lender.
There's a big difference between being "pre-qualified" and being "pre-approved." Pre-qualified just means someone estimated what you might afford based on what you told them. Pre-approved means a lender has actually pulled your credit, verified your income and tax records, and reviewed your bank statements — and can tell you, in writing, what you're approved to spend.
Getting pre-approved costs you nothing, and it gives you a real number to work with before you fall in love with a house you may not qualify for.
It's also worth knowing that buyers are now required to sign a buyer broker agreement before an agent can show them homes — that's a rule change from last year. Even so, the seller still covers the buyer's agent fee in the vast majority of transactions, so working with a good agent usually still doesn't cost you anything out of pocket.
Interview Your Agent
It's completely fair to ask an agent how many homes they've closed, how long they've been in the business, and how many transactions they've handled. A good agent wants to be asked these questions. Buying a house is one of the biggest financial decisions you'll make, and you deserve someone who's genuinely looking out for you.
The Bottom Line
You don't need 20% down. You don't need perfect credit. You need a plan — and now you've got one. Down payment programs exist, your credit score can move faster than you think, and sellers often cover the closing costs. If you're ready to find out exactly what you qualify for, reach out and let's talk it through.
Frequently Asked Questions
Do I need 20% down to buy a house? No. Depending on the loan program, you may qualify with 0% down (USDA or VA loans), 3.5% down (FHA), or 5% down (conventional).
What credit score do I need to buy a house? Many programs look for a credit score of 620 or higher. VA loans may accept scores as low as 580 for eligible veterans.
How can I raise my credit score quickly before buying a house? List your debts from smallest to largest balance, pay the minimum on all of them, and put any extra money toward the smallest balance first. Once it's paid off, apply that payment to the next smallest, and repeat. This approach is often called the debt snowball method.
Who pays closing costs when buying a house? Closing costs are frequently negotiated
into the purchase contract and paid by the seller, though this depends on the market and the specific offer.
What's the difference between being pre-qualified and pre-approved? Pre-qualification is an estimate based on information you provide. Pre-approval means a lender has verified your income, credit, and financial documents and can confirm in writing what you're approved to borrow.
What's the difference between an FHA loan and a conventional loan? FHA loans allow a lower down payment (3.5%) but require mortgage insurance for the life of the loan unless refinanced. Conventional loans require at least 5% down, but mortgage insurance drops off automatically once you reach 20% equity.
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