Top 10 Mortgage and Home-Buying Myths & Truths
Few purchases carry higher stakes than buying a home, which is exactly why it pays to separate fact from hearsay before you dive in. The trouble is that plenty of the "common knowledge" floating around about mortgages and homebuying is outdated, oversimplified or flat-out wrong, even when it comes from people who mean well.
Repeated often enough, that bad information hardens into myths that shape how people approach one of the biggest financial decisions of their lives. It's worth setting the record straight, because knowing what's actually true puts you in a much stronger position going in.
Work through the 10 myths below, then take the next step and get pre-approved so you're ready to move when the right home comes along.
Top 10 mortgage & homebuying myths
- 20% down payment is necessary
- It’s cheaper to rent than own
- It’s cheaper to buy a fixer upper
- You need to be debt-free first
- All lenders are the same
- Spring is the best time to buy
- You should find a home before applying for a loan
- 30-year fixed mortgage is the only way to go
- You should always go with the lowest interest rate
- Once your offer is accepted, the deal is done
1. A 20% down payment is necessary
Paying 20% of a home's price upfront and financing the rest with a mortgage is a habit that traces back to the years following the Great Depression, when lending standards tightened dramatically.
Why 20% specifically? Even housing historians aren't entirely sure.
The number stuck around as the norm for decades starting in the 1950s, but it hasn't reflected reality in a long time. According to NAR's 2025 Profile of Home Buyers and Sellers, the median down payment for first-time buyers reached 10%, the highest level in nearly 40 years, while repeat buyers put down a median of 23%.
Plenty of mortgage options today only require 3% down if you qualify. Just know that putting down less than 20% typically means paying for private mortgage insurance (PMI), a monthly premium that offsets the added risk your lender takes on.
If saving 20% upfront feels out of reach, and for most buyers it is, ask your lender about down payment assistance programs you might qualify for.
2. It's cheaper to rent than own
On a pure monthly basis, this myth actually has some truth to it right now. In much of the country, rent still runs lower than the total monthly cost of owning a comparable home, once you factor in the mortgage payment, taxes and insurance together.
But monthly cost is only half the story. Every rent payment goes to a landlord, while a mortgage payment builds equity that's yours. That difference compounds over time. NAR data has found that homeowners hold roughly 43 times the net worth of renters on average, largely because home equity accumulates while rent payments don't build anything for the person paying them.
Rent growth has cooled some compared to the sharper increases of a few years ago, but rents remain well above pre-pandemic levels in most markets, and there's no cap on how high they can climb over a multi-year lease. A fixed-rate mortgage, by contrast, locks your principal and interest payment in place for good.
If you plan to stay in the same area for more than a few years, the long-term math still tends to favor buying, even in a market where renting looks cheaper on paper today.
3. It's cheaper to buy a fixer-upper
Home improvement shows make gutting a fixer-upper look like the smart, budget-friendly path to a dream home.
In practice, a fixer-upper can be a cheaper way to get your foot in the door, but the renovation costs that follow often bring the total price right back up to what a move-in-ready home would have cost. Even with a renovation loan built specifically to finance the work, expenses tend to add up faster than buyers expect.
4. You need to be debt-free first
A common worry among first-time buyers, especially those carrying more student debt than previous generations did, is that any outstanding loans will automatically disqualify them from getting a mortgage. That's not how it works.
Lenders don't look at your total debt balance in isolation. They look at whether you can afford your housing payment given your monthly income, which is where your debt-to-income (DTI) ratio comes in. Your DTI is simply the share of your gross monthly income that goes toward recurring debt payments.
As long as your debt stays reasonably in line with your income (and ideally you're paying it down), a student loan, car loan or other debt on its own generally won't keep you out of a home.
5. All lenders are the same
Buyers often shop lenders on rate alone, but rate is only one piece of the picture. Lenders differ in plenty of other ways that can shape your entire homebuying experience.
You might work with a Loan Officer, a mortgage broker or a fully - online lender. Each path has real tradeoffs worth understanding before you commit.
A lender's technology can make or break how smooth the process feels, from applying to uploading documents to closing. Our Digital Mortgage was built to keep that entire process fast and straightforward.
6. Spring is the best time to buy
Spring earned its reputation as the "Spring Selling Season" for a reason: sellers list their homes then so they can close and move over the summer, landing their kids in a new school district before fall.
The catch is that everyone else follows the same calendar, which floods the spring market with buyers and pushes prices up. Shopping outside that peak window, including in the fall, could work firmly in your favor.
7. You should find a home before applying for a loan
Plenty of buyers start by casually browsing listings just to get a feel for what's out there. Almost inevitably, they fall for a home and want to make an offer on the spot, and what usually follows isn't pretty.
Either they lose the home because financing takes too long to line up, or their lender tells them the home is out of reach once the numbers are run.
That's why getting pre-approved before you start shopping matters, no matter how serious you think you are. It lets you move fast the moment you find the right home, and a strong pre-approval like PowerBid Approval, as opposed to a basic pre-qualification, sets your offer apart from the competition.
8. A 30-year fixed mortgage is the only way to go
A 30-year fixed mortgage is popular for good reason, but it's far from the only option worth considering. Shortening your loan term means paying less interest overall and owning your home free and clear sooner.
A 15-year mortgage usually comes with a higher monthly payment, but the total cost over the life of the loan is often dramatically lower.
- A 15-year mortgage typically carries a lower interest rate than a 30-year loan
- You'll build home equity faster
- You'll be mortgage-free in half the time
9. You should always go with the lowest interest rate
A low headline rate can mask higher fees buried elsewhere in the loan. That's why the annual percentage rate (APR) matters more than the interest rate alone. APR reflects the true cost of borrowing, including closing costs, origination fees, PMI and other charges.
You can also buy down your rate by purchasing points from your lender. One point equals 1% of your loan's principal balance. Ask your lender whether buying points makes sense for your situation.
10. Once your offer is accepted, the deal is done
This is often the most surprising myth to get busted, and the most stressful. An accepted offer is worth celebrating, but it's not the finish line, and it's usually not even the end of negotiations.
Once your offer is accepted, your deal sits in one of two states: contingent or pending.
Contingent means the seller accepted your offer with conditions still to be met. If either side fails to clear those conditions, the deal can fall apart. Common contingencies include:
- Home inspection: may uncover issues that need repair and can trigger renegotiation over who covers the cost
- Appraisal: may value the home differently than the agreed purchase price, which can affect your financing
- Financing: gives you time to actually secure your loan, which is a separate step from pre-approval
- Clear title: confirms the seller can transfer ownership free of liens or other legal issues
How can I start the mortgage process?
Now that these myths are out of the way, the path forward is simpler than it might have seemed. Getting pre-approved is the single most useful step you can take early on, since it tells agents and sellers you're a buyer who's ready to act rather than just browsing.
Curious how fast the process can move? Learn more about Same Day Mortgage.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.
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