Top 10 Myths About Buying a Home: Common First-Time Homebuyer Misconceptions
You’ve decided you’re ready for the next step and want to buy your first home. Even if you feel prepared, the homebuying journey can be overwhelming, especially with so much information out there, both true and misleading. Many first-time homebuyers have similar uncertainties, often falling prey to common myths that can complicate their journey.
This blog will debunk the top 10 myths about buying a home to help give you the first-time homebuyer tips, knowledge, and confidence to make informed decisions about your future.
Myth #1: I Won’t Have to Pay Closing Costs (or My Lender Will Pay Them)
In some cases, buyers think they don’t have to pay closing costs on their first home. However, this isn’t the case. Closing costs must be paid to finalize your home purchase and may include:
- Lender fees
- Title insurance
- Title-related fees
- Transfer taxes
- Prepaid items (property taxes, homeowners insurance, setting up escrow accounts, etc.)
So, who pays closing costs? There are several first-time homebuyer mortgage programs and grants, like the First Front Door, to help cover closing costs. Grants are available until funds run out, which can happen in less than 24 hours, so working with a partner like Diamond can help make the application process easier. Any closing costs that are not covered through grants are left to the buyer to pay.
Myth #2: Lots of Mortgage Programs Offer 100% Financing
Another common myth about buying a home is that there are many mortgage programs with 100% financing. While there are some first-time homebuyer programs that can help with financing, there are only two programs that actually offer 100% financing.
U.S. Department of Agriculture (USDA) Loans
To qualify for this loan, your home must be within USDA-designated geographical boundaries. While they’re designed to develop rural communities, some suburban areas also qualify for USDA loans. This loan requires a 1% upfront guarantee fee that can be rolled into your loan amount. Additionally, you’ll be responsible for mortgage insurance, but this lowers every year based on your principal amount. The seller may cover some of your closing costs, but there’s a predetermined cap.
U.S. Department of Veterans Affairs (VA) Loan
You must have at least two years of former military experience (or 90 days if you’re still enlisted) to qualify for this loan. VA loans allow credit scores as low as 620, but there’s a funding fee that can be rolled into your loan amount. There’s also no mortgage insurance required. The seller may cover a portion of your closing costs, but there’s a predetermined cap.
Myth #3: My Parents Can Co-Sign for My Loan
Many first-time homebuyers struggle to qualify for a mortgage due to a lack of credit history or student loan debt. While you may think you can get a co-signer like other types of loans, this is a mortgage misconception.
Myth #4: I Need a 20% Down Payment to Get a Mortgage
Another area that confuses first-time buyers is down payment myths. While 20% down helps you avoid private mortgage insurance (PMI), it isn’t a requirement to qualify for a mortgage. You can put as little as 3% to 5% down on a conventional mortgage, or even less if you qualify for USDA or VA loans. The typical down payment for a home is 16%. However, this can change depending on whether you’re a first-time buyer or qualify for other loans.
While you may be tempted to save until you have your 20% down payment, this isn’t always the best idea. For example, if you put 10% down on a home, you can use the money you don’t put towards the down payment to improve your overall financial health. This might include paying down high-interest debt, increasing your retirement savings, or building an emergency fund, which is especially important once you’re a homeowner.
Myth #5: Increasing My Current Debt Before Settlement Won’t Affect My Application
It’s important to avoid making any large purchases once you’ve gone under contract on a home. This can include items like cars, furniture, appliances, and lawn equipment. You also shouldn’t take out any new personal loans or apply for new credit cards.
Increasing your debt right before settlement may alarm underwriters, who play a major role in whether you get a mortgage. Plus, it can impact your interest rate, the mortgage amount you’re approved for, your credit score, and the down payment amount.
Myth #6: I’m Guaranteed to Receive Seller Concessions
Another common first-time home buying misconception is that you’ll always receive seller concessions. While you can certainly try for seller concessions, 44% of homebuyers received them in the first quarter of 2025, it’s not guaranteed. These are usually requested as part of the original offer or if major issues surface during home inspections. They can be used to cover repairs, purchase mortgage points, or make a larger down payment to avoid PMI.
Myth #7: Buying a Home is Always Cheaper and a Better Investment Than Renting
Depending on where you live, renting can be cheaper than buying a home.
Rents and mortgage payments are much closer than they have been in the past, and, in a majority of the top metro areas, rents are cheaper than mortgages for a similar home.
However, if you purchase a home, it’s an asset that can build equity over time, provide a relatively stable monthly cost, and potentially create a retirement income, which, with the average age of a first-time homebuyer being 38, is a concern.
There are benefits to each option, so it’s important to do the research and the math and see which one works best for you and your budget.
Myth #8: Buying a Fixer-Upper Will Save You Money
A fixer-upper might seem like a good idea on the surface. They’re usually a fair price and can turn into your dream home. However, true fixer-upper homes need more work than a fresh coat of paint. These homes can have major problems, some of which may not be visible when you do a walk-through and can also be missed during home inspections.
On average, it costs around $52,000 to renovate your home, but the price can go up from there depending on how much work you need to do. If it’s cosmetic work, then it could be cheaper. But once you get into plumbing, electrical, or foundation work, the price can quickly increase.
Ultimately, you might end up with your forever home, but you probably won’t save money on the journey.
Myth #9: Fall and Winter are Bad Times to Buy a Home
Tradition says that spring and summer are the best times to buy a home, but fall and winter have their advantages.
Most houses go on the market in spring and summer since many families prefer to move when their children are out of school for the summer. That doesn’t mean you have to buy in the spring or that you’ll pay less if you do.
There’s less competition in the colder months, and prices can be lower since sellers are motivated to finalize a sale. But in the end, the best time to buy a home is when you’re financially stable. So research the market, but don’t let seasonality sway you.
Myth #10: Condos are Cheaper to Buy Than Single-Family Homes
Condominiums and townhouses often have a lower selling price and have perks like lower maintenance and little to no yard work. However, these can come with hidden costs.
Typically, both have Home Owner Association (HOA) dues and occasional assessment payments for building improvements.
Since these costs can raise your monthly expenses several hundred dollars per month, before you put in an offer, take a close look at the expenses and see if that’s in your budget.
Take the Next Step with Diamond
With so many myths about buying a home in the world, having a trusted partner to help you navigate them is essential. With Diamond, we have our Mortgage Center to help explain the products and services we have available.
Ready to take the next step? Contact our team of mortgage experts to discuss your specific home buying needs.
