Real Estate Myths

Here are myths and the facts that can help you make the right decisions about buying a home.
You Need a 20% Down Payment
A widespread idea exists that a 20% down payment is mandatory, but buyers can choose from many options for lower down payments. In addition to VA and USDA loans, many state-specific home-buying grants and first-time home buyer down payment programs are available, he says.
The facts: The median down payment for all homebuyers in 2024 was 18% and just 9% for first-time buyers, according to the National Association of REALTORS®. That said, buyers who put down less than 20% will likely need to pay an additional monthly fee for private mortgage insurance.
Online Home Value Estimates and Agent Pricing Are Equally Accurate
Plug in your home’s address, and an online estimate may give you a number for what your home is worth. But a calculator can’t always capture your home’s true value.
The facts: What the algorithms can’t see are things like spectacular views, the new landscaping that you just invested in, the remodeling that you’ve done, and the wonderful condition and care that you have taken in your home. Agents and appraisers, on the other hand, base their assessments on recent and pending sales, your home’s condition, and the latest local market trends for a more accurate picture of value.
Home Renovations Always Increase Home Value
Your sales price won’t repay every dollar you put into a renovation. Personal style doesn’t always appeal to buyers, and overimproving compared to similar homes in your neighborhood can backfire. The highest return can come from not-so-sexy projects like installing air conditioning if your home doesn’t have cooling, updating the roof, or replacing the hot water heater.
The facts: Projects with the biggest payoffs are often smaller ones, according to the “Remodeling Impact Report” from the National Association of REALTORS® and the National Association of the Remodeling Industry. Those include replacing a front door with steel (100% ROI) or fiberglass (80% ROI), renovating closets (83% ROI), and installing new vinyl windows (74% ROI).
A real estate professional can help you prioritize which projects are strong investments in your market.
Renting Is Smarter than Buying
It’s true that monthly mortgage payments can outpace rents in some markets. Rent-versus-buy indexes may even suggest that renting looks less expensive in the short term. 
The facts: Rents generally rise year after year. For home buyers, the majority take out a fixed-rate mortgage, which means that monthly mortgage payment is fixed for the duration of the residence. Home values tend to appreciate over time, helping homeowners build wealth. Typical homeowners today have about $430,000 in net worth compared to renters, whose net worth is less than $10,000.
The Mortgage Lender Offering the Lowest Interest Rate Is Best
Borrowers should shop around with multiple lenders and look beyond interest rates to the bigger picture.
The facts: The annual percentage rate, or APR, provides a clearer measure of the loan’s total cost, since it includes closing costs, loan origination fees, and discount points. In mortgage shopping, it’s also important to compare loan terms and understand that adjustable rates can rise significantly over time.
You Need Perfect Credit for a Mortgage
It’s true that higher credit scores can unlock larger loan amounts, smaller down payments, lower fees, and lower interest rates, but perfect credit isn’t required. A score in the mid-700s or higher usually qualifies for the best rates, but buyers with lower credit scores still have options.
The facts: Lenders typically require a minimum score of 620 for most conventional loans. Federal Housing Administration loans tend to have more-flexible requirements: Borrowers can qualify with a score as low as 500 if they can put 10% down.
Student Loan Debt Nixes Qualifying for a Mortgage
Many younger buyers assume that student loans automatically disqualify them from a mortgage, but that’s not true.
The facts:  Student loan debt gets calculated into the borrower’s overall debt calculation, just like any other debt.  A loan officer can work with the borrower to discuss how their student loan debt could affect their qualification.
Bidding Wars Have Ended
In July 2025, 21% of homes sold for above asking price, and the average listing received 2.1 offers, according to the July 2025 REALTOR® Confidence Index, which is based on feedback from 1,500 real estate professionals.
The facts: Buyer bidding wars for homes for sale are still going on. The properties tend to be in a great location, priced correctly, staged and show well, beautifully photographed, and presented properly online.
New Home Construction Costs Much More Than Existing Homes
New homes have historically been dramatically more expensive than existing homes, sometimes 20%, 30%, even 40% more.
The Facts: If you look at new home prices and existing home prices, they’re nationally on par, and often coming in around the same. 
Housing Affordability Is a Problem on the Coasts
Ask anyone living in middle America, whether it’s in Columbus or Nashville, and they are seeing quite high home prices too. Home prices were outpacing wage growth for multiple years and getting out of hand. So, by historical local standards, across the country we are facing affordability issues.
The facts: The average household pays $2,256 a month for a mortgage on an existing single-family home (assuming 20% down), according to the NAR second-quarter Housing Affordability Index. That means the typical family spends 25.7% of their income on housing. By comparison, financial experts often recommend households keep that share under 28% of gross monthly income to avoid becoming cost-burdened.
Preapproval and Prequalification Are the Same
Prequalification and preapproval serve different purposes.
Prequalification offers a broad overview of your finances, giving you a rough idea of what you might be able to afford.
Preapproval requires a lender to verify your financial documents, credit report, and other details to provide a more accurate loan amount.
The facts: With preapproval, the loan officer not only reviews your documentation and credit but also runs your loan through an automated underwriting system and generates actual underwriting. A preapproval letter signals to sellers that you’re a serious buyer, and it could help strengthen your offer.
We’re Headed for a 2008 Housing Crash Repeat
Today’s market looks very different from the one in 2008.
The facts: Back then home prices plunged 30% to 40%. It occurred because of risky subprime mortgages that appeared heavily in the market. Consequently, we had around 30% of transactions being distressed properties. Today, because of sound underwriting standards, distressed property activity is at 2% to 3%.
Further, about half of homeowners with a mortgage are considered equity-rich, meaning they owe less than half of their home’s estimated market value. Over the last five years alone, the average homeowner’s wealth has grown by $140,900, NAR research shows.
Whether you’re reading headlines or listening to opinions or news, checking the facts and the numbers behind them will separate facts from real estate myths and lead to more-sound real estate decisions.