Homebuying Myths That Can Cost You the Deal

The 20% figure originates from the threshold at which private mortgage insurance (PMI) is no longer required on conventional loans. PMI is an added monthly cost, but it doesn't make homeownership impossible — it makes it accessible sooner. FHA loans permit down payments as low as 3.5% for qualifying borrowers. VA loans, available to eligible veterans and service members, and USDA loans, for qualifying rural properties, require no down payment at all. The right down payment strategy depends on your full financial picture, not a single benchmark. A licensed mortgage professional can compare loan types for your situation.

Pre-qualification typically requires only self-reported income and debt figures and results in a rough estimate. Pre-approval means a lender has reviewed your credit report, pay stubs, tax returns, and bank statements and issued a conditional commitment. In competitive markets, sellers and their agents often disregard offers unaccompanied by a pre-approval letter. Confusing the two can cost you the home before negotiation even begins.

Competitive markets create pressure to strip contingencies, but a home inspection is a protective tool, not a negotiating tactic. Inspectors routinely uncover issues — roof wear, electrical deficiencies, foundation cracks, HVAC problems — that are invisible during a showing. Without an inspection contingency, buyers accept those costs without recourse. Some buyers in competitive situations use an "information-only" inspection (proceeding without a repair request) as a middle ground, but this still requires careful consideration. Never waive an inspection without fully understanding what you are assuming financial responsibility for.

Credit score thresholds differ significantly across loan programs. FHA loans, for example, may be available to borrowers with scores as low as 580 (with a 3.5% down payment) or even lower with a larger down payment, depending on lender overlays. Conventional loans generally require higher scores, but "excellent credit" is not a universal prerequisite for homeownership. That said, a higher score typically translates to a lower interest rate, which compounds significantly over a 30-year loan. Reviewing and improving your credit before applying — even by a few months — can meaningfully affect long-term costs.

Sellers set asking prices based on comparable sales, agent guidance, and their own expectations — all of which leave room for movement. Buyers routinely negotiate price reductions, seller-paid closing costs, repairs, and credits depending on market conditions, inspection findings, and days on market. In a seller's market, offers above asking are common but not universal; in a buyer's market, meaningful discounts are achievable. Understanding current local conditions is essential, which is where a knowledgeable buyer's agent and resources like the Housing Market hub can provide important context.

Dual agency — where a single agent represents both buyer and seller — is legal in many states but creates an inherent conflict of interest. The listing agent is contractually obligated to serve the seller's goals, which often means maximizing sale price. A dedicated buyer's agent provides access to market data, negotiation expertise, and fiduciary representation the buyer would otherwise lack. In most transactions, the seller's proceeds cover the buyer's agent commission, meaning the representation costs the buyer nothing directly — though commission structures can vary and should be discussed upfront.