Many potential homeowners don’t even attempt to buy, and they miss out on a serious opportunity. Common home buying myths scare them off.
Some borrowers who could afford a home don’t take the plunge because of misguided ideas about getting a house loan. Many believe they need a very good credit score, or that they still need 20 percent down, to buy a home. It’s time to set the record straight.
6 common home buying myths, debunked
Myth #1: Buying a home takes a stellar credit history and credit score
“A good benchmark is having a 640 credit score, and you pay your bills on time,” says Jill Underwood, then a senior loan officer at PrimeLending in Kansas City, Mo. “Even if you don’t have a good track record of paying your bills on time, you can still buy a house.”
There are even mortgage programs out there to get a loan with a credit score below 620. But these programs can require more money down and more money left over after closing, she says.
Myth #2: You can still buy a house even with a really crappy credit history
Yes, this is the opposite of the No. 1 myth. But there are people out there (Underwood comes across them all the time) who believe they can get a mortgage with a 550 credit score and three pages of collections on their credit report.
Underwood says these borrowers think they can get a loan to buy a house. “They come in my office and tell me that they have been out looking at houses. They have so many bills they haven’t paid. It’s crazy,” she says.
In practice, a 550 score with several unpaid collections is very hard to approve. FHA allows scores of 500 to 579 with 10% down (manual underwriting, lower debt ratios), and FHA does not ban collections. But each collection needs a documented explanation, and most lenders add their own overlays.
Myth #3: You need 20 percent for the down payment
“You can get a zero down payment even if you aren’t a veteran,” Underwood says. USDA loans allow zero down for eligible buyers in eligible rural areas. VA loans allow zero down for eligible veterans.
“Plus, there are so many down payment assistance programs out there in most states. I have four or five payment assistance programs right here in Kansas and Missouri. You can get free money that you don’t have to give back,” she says. “The FHA loans ask for 3.5 percent down but that can be a gift from your mom, dad, grandma or others. People can buy houses without any money out of their pocket.”
Myth #4: Closing costs are outrageous
Underwood says they don’t have to be. In fact, she has many buyers who are getting their closing costs paid completely by the seller.
Seller contributions have limits, though. In 2026, FHA lets the seller and other interested parties pay up to 6 percent of the sales price toward the buyer’s closing costs.
Also, some lenders offer lender credits: you accept a higher interest rate, and the lender pays some or all of your closing costs.
You pay less up front with lender credits. However, you pay more over time because the interest rate is higher.
Myth #5: Owning a home is the American dream
“Not necessarily,” Underwood says. “It really depends on what generation you are from.”
Myth #6: Home buying is always a great investment
Sometimes, and sometimes not.
“In the sand states such as Florida, Nevada and California, they saw more than a 25 percent or more drop in value during the mortgage crash,” Underwood says. “But the value of purchasing a home is about planting roots, having the right to write off the interest on your taxes and having stability in your life. You can hope that you get appreciation in its value.”
The interest write-off applies only if you itemize deductions, according to IRS Publication 936.
Check your home buying eligibility. Start here (Nov 8th, 2026)
