# First-Time Home Buyer Myths, Debunked

First-time home buyers carry a heavy load of misconceptions into the mortgage market. Next Door Lending addressed the most common myths that prevent people from buying their first home.

**The 20 percent down payment myth**

The biggest barrier most people believe they face is the need for a 20 percent down payment. This simply isn't true anymore. Federal Housing Administration loans allow down payments as low as 3.5 percent. Conventional loans through Fannie Mae and Freddie Mac accept 3 percent down. Veterans Affairs loans and USDA loans in rural areas require zero down payment. Putting down less than 20 percent means paying mortgage insurance, but that cost remains manageable for most borrowers and disappears once equity reaches 20 percent.

**You need a perfect credit score**

Another false belief: you need a pristine credit score to qualify. Most lenders approve mortgages for borrowers with credit scores in the 620 to 640 range. FHA loans explicitly allow scores as low as 580. The interest rate may be higher with lower credit, but qualifying is entirely possible. Building or repairing credit before applying helps, but waiting for a perfect score can mean missing favorable rate environments.

**Closing costs are negotiable**

First-time buyers often assume closing costs are fixed. They're not. Borrowers can negotiate with lenders on origination fees, processing fees, and appraisal costs. Shopping multiple lenders reveals rate differences. Some lenders offer rate-buy-down programs or cover closing costs to compete for business. Getting a Loan Estimate from at least three lenders before committing takes time but saves thousands of dollars.

**Your debt disqualifies you**

High student loans or car payments don't automatically eliminate you from home buying. Lenders look at debt-to-income ratio, not total debt amount. A ratio below 43 percent allows mortgage approval for most borrowers. Someone earning $60,000 annually can carry $25,800 in total monthly debt and still qualify. Paying down existing debt improves this ratio and strengthens applications.

**You can't buy with a co-signer**

Parents or relatives can cosign mortgages or go on the loan together. A co-signer with stronger credit or income boosts approval odds and secures better rates. Both parties' credit scores and income count toward approval, expanding qualifying options for buyers with less-than-ideal financial profiles.

**The inspection isn't necessary**

Some buyers skip professional inspections to save money. This backfires constantly. A $300 to $500 inspection catches foundation issues, roof damage, electrical problems, and plumbing failures that cost tens of thousands to repair. Inspection contingencies in offers protect buyers by allowing withdrawal if major defects emerge. Skipping this step ranks among the costliest money-saving mistakes.

**Pre-approval locks your rate**

Pre-approval letters approve you for a certain amount but don't lock interest rates unless explicitly agreed. Rates can change between pre-approval and closing. Locking the rate in writing protects against rate increases during the mortgage process, which typically takes 30 to 45 days. Always confirm lock duration and terms in writing.

**Getting started requires perfection**

The final myth: you must have everything perfect before applying. Real estate markets move fast. Getting pre-approved early signals serious intent to sellers. Pre-approval requires just income verification, credit authorization, and asset documentation. Lenders understand that first-time buyers are building credit and savings simultaneously. Starting the process before everything aligns often makes the difference between buying and waiting another year.