5 Homebuying Myths and Common Misconceptions

Myth #1: You need a 20% down payment to buy a home

This is probably the most common thing we hear, and it keeps a lot of good buyers sitting on the sidelines who could have already been in a home. A 20% down payment can help you avoid private mortgage insurance (PMI) on a conventional loan, but it has never been a requirement for most buyers. FHA loans go as low as 3.5% down, and there are conventional programs that start around 3%. If you served in the military, the news is even better because a VA loan lets most eligible buyers with full entitlement finance the home with $0 down and no monthly PMI at all, which is the single biggest reason the program exists.

Myth #2: You should buy the most expensive home you can possibly afford

A lot of folks assume that stretching to the top of their pre-qualification amount is the smart move, but the number a lender approves you for and the number you should actually spend are often two different things. If you max out your budget and then the water heater goes or a paycheck gets interrupted, that cushion you used to have is gone. We would rather see you comfortable in a home that leaves room to save and handle the surprises that come with owning, and a payment that fits your real life usually beats the biggest house on the block over the long run.

Myth #3: You cannot get a good deal in a seller’s market

When there are more buyers than homes, prices climb and you can end up in a bidding war, so a lot of people decide to just wait it out. That waiting can cost you, because there is no perfect time to buy and rents usually keep climbing while you sit. A knowledgeable real estate agent can point you toward listings that have not gone wide yet, and being ready with a real pre-qualification letter in hand makes a seller take your offer seriously. Something many buyers do not realize is that you can always refinance your rate later once the market settles, but you can never go back and buy at today’s price.

Myth #4: You cannot buy a home with less-than-perfect credit

This is the myth that frustrates me the most, because a lot of buyers get turned away by a big lender and assume the door is closed everywhere. The VA itself does not set a minimum credit score, but every lender picks its own floor, and most of them want to see a 640 or higher. At PBT Bancorp our minimum is a 500 credit score on VA purchases and cash-out refinances, which means we can often help families that a larger lender already told no. Of course, the higher your score the better your pricing will typically be, but a lower score does not automatically shut you out, and we have lenders who will work with you while you keep building it.

Myth #5: You can skip the home inspection if the house looks good

A home can look beautiful on a Saturday showing and still have problems hiding behind the walls, so skipping the inspection to make your offer look stronger is a gamble that can cost you for years. A good inspector checks the things you cannot see on a walkthrough, the structure, the roof, the wiring, water damage, and that report gives you real leverage to ask the seller for repairs or a credit before you ever sign. On a VA loan there is also a separate VA appraisal that looks at basic safety and structural soundness, but that is not the same as an inspection done for your benefit, so we always tell our buyers to get both.

The home buying process has a lot of moving parts, and most of these myths fall apart the minute you talk to someone who does this every day. Our team has decades of experience working with Veterans and has helped over 3,000 families find their home or refinance and save money, and as an FDIC member bank with access to over 35 wholesale lenders we close VA loans in 2 to 3 weeks instead of the 30 days or more you see at the bigger shops. Give us a call at 800-697-4371 or fill out our online pre-qualification form, and trade the myths for your real numbers in about 15 minutes.

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