10 Common Myths of Home Buying Debunked

Block that each have letters on them that spell out "myths" with a small house plant in the background.

10 Common Myths of Homebuying—Debunked

Buying your first home is exciting, but it can also be confusing. There’s a lot of advice out there—and not all of it is true. Whether you’re a first time homebuyer or returning to the market, it’s important to separate fact from fiction.

Let’s clear up 10 of the biggest homebuying myths, so you can move forward with confidence—and maybe a little down payment assistance to help along the way.

Myth 1: Buying Is Always Cheaper Than Renting

It depends. If you’re staying in one city or county for at least 5 years, buying may make more sense. That’s because monthly payments build equity over time.

But if you plan to move soon, closing costs, fees, and maintenance could make renting the smarter choice.

The Truth for First Time Homebuyers:

Talk to a housing counselor or take a homebuyer education class to find out what’s right for your situation. Many first time buyers qualify for payment assistance programs that make ownership more affordable.

Myth 2: Renters Don’t Pay Property Taxes or Insurance

Renters don’t write checks to the tax office, but your landlord does—and that cost is baked into your monthly rent payment. Same goes for insurance. Your rent helps cover the landlord’s policy.

The True Costs of Renting:

Whether you rent or own, you help pay for taxes and insurance. If you buy, you’ll also likely need mortgage insurance unless your down payment is large enough (usually 20%).

Myth 3: You Need a 20% Down Payment

You do not need 20% to buy a home in 2025. In fact, many first time homebuyer down payment programs allow you to get in with as little as 3%. Some payment assistance programs even offer a forgivable loan for your down payment.

FHA loans require just 3.5% down

VA loans and USDA loans require 0% down for eligible program participants

Many states offer down payment assistance programs and closing cost assistance

The Truth About Down Payments and Closing Costs:

Focus on what you can afford now, not just the ideal 20%. You might qualify for assistance programs that cover a big part of your payment and closing costs.

Myth 4: Buying a Home Has High Opportunity Costs

Some say renting and investing the difference makes more sense. But most people don’t actually invest that extra money.

The Truth about Renting Vs. Buying:

Homeownership is still one of the best long-term wealth builders. Your mortgage payments help you build equity, while rising purchase prices increase the value of your investment.

Plus, payment assistance helps make it more affordable upfront.

A person in a white shirt is drawing a line with a red marker that weighing myths and facts.

Myth 5: You Can Flip Your House Fast for Profit

Some people buy thinking they’ll make quick cash. That’s risky. The home buying process involves closing, inspections, and maintenance—all of which cost funds.

The Truth About House Flipping:

Homes are best as long-term investments, especially for first generation homebuyers building stability. If you’re looking to get rich quick, real estate may not be your answer.

Myth 6: Real Estate Is Always the Best Investment

Homeownership is great—but it isn’t your only path to building wealth. You’ll still need to budget for monthly payments, repairs, and refinance options down the road.

The True Value of Your First Home:

A smart financial plan includes both homeownership and other savings (like a retirement account). But a home gives you a stable place to live—and that’s a powerful asset.

Myth 7: Once You Save for a Down Payment, You’re Done

Think saving for a down payment is your only step? Think again. You’ll also face:

  • Closing costs
  • Origination fees
  • Appraisal and inspection fees
  • Title insurance
  • Escrow fees

Most buyers spend 2% to 5% of the home’s purchase price on closing. For example, if your home costs $300,000, expect to pay $6,000 to $15,000 in payment and closing costs.

The truth about down payment assistance programs:

Down payment assistance can also help with closing costs. Look for closing cost assistance or down payment assistance grants in your city or county.

Myth 8: You Need Perfect Credit to Qualify

You don’t need a 780 credit score to buy a home. While a higher credit score means a lower interest rate, many assistance programs accept lower scores.

  • FHA loans: allow scores starting at 580
  • Some local programs offer help even with scores in the 500s
  • You can refinance later if your credit improves

The Truth About Eligibility Requirements:

You may already be eligible for a mortgage loan even with a few credit dings. Check your credit report, and if needed, contact a nonprofit housing advisor for help improving your score.

Myth 9: Rates Are Too High to Buy Now

Yes, mortgage rates have risen slightly in 2025. But they’re still reasonable compared to historic highs.

And many loan programs offer payment assistance or flexible loan terms to reduce your cost.

The Truth About Mortgage Rates:

Don’t wait forever for the “perfect rate.” Owning a home gives you stability. If rates drop later, you can always refinance your loan.

Myth 10: One Missed Mortgage Payment Means Foreclosure

Missed a payment? Don’t panic. One late mortgage bill won’t make you lose your house.

  • 1 missed payment: You’ll pay a fee and get a hit on your credit
  • 2 missed: You’ll get a notice from your lender
  • 3+: Foreclosure proceedings may begin

The Truth About Foreclosure Prevention:

If you’re struggling, contact your lender or a HUD-approved agency. There are assistance programs for struggling homebuyers to help avoid foreclosure.

Extra Tips for Homebuyers

  • Use local payment assistance programs to reduce your upfront costs
  • Compare different loan types to find what fits your needs
  • Ask about eligibility requirements before applying
  • Budget for your primary residence with both loan and non-loan costs
  • Make sure your loan amount and purchase price stay within your budget

And don’t forget—repeat homebuyers may still qualify for certain down payment assistance programs. The application process is easier than you might think.

What Should First Time Buyers Do Next?

To make your journey smoother:

  1. Visit a HUD-approved homebuyer education site or local nonprofit
  2. Check your credit report and improve your credit if needed
  3. Explore down payment assistance and payment assistance programs in your state
  4. Talk to a lender who works with first time homebuyers and explains all programs
  5. Ask for a breakdown of payment and closing costs before final approval

Buying a new home doesn’t have to be overwhelming. With the right programs, details, and support, you can become a confident, informed homebuyer.

Helpful Resources

Jeff Michael
Article written by
Jeff Michael is the author of More Than Money, a debtor education guide for pre-bankruptcy debtor education, and Repair Your Credit and Knock Out Your Debt from McGraw-Hill books. He was a contributor to Tips from The Top: Targeted Advice from America’s Top Money Minds. He lives in Overland Park, Kansas.
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