What You Really Need to Buy a Home

A lot of people talk themselves out of buying before they ever talk to a lender. A friend said you need a huge down payment. A coworker got turned down once. A parent swears mortgage insurance is money thrown away. Most of it is outdated, and some of it was never true.

Six myths, and what's actually true

• 1
  “You need a massive down payment.” Several loan programs are built for buyers who put down far less than people expect. How little depends on the program and your credit. Here's how down payments work.
• 2
  “Mortgage insurance is money thrown away.” It's what lets you buy with a smaller down payment instead of saving for years. On a conventional loan it can usually come off once you've built enough equity. Mortgage insurance, explained.
• 3
  “A bigger down payment always gets you a better rate.” It can help, but pricing also weighs your credit, your debts compared to your income, and the type of loan. Sometimes keeping more cash in the bank is the smarter move.
• 4
  “My credit isn't perfect, so I'm out.” Credit matters, but different programs have different standards. Plenty of people buy with scores that aren't perfect. Don't rule yourself out before someone has looked. More credit myths, busted.
• 5
  “Down payment help is only for low incomes.” Many assistance programs look at other things, like being a first-time buyer, where you're buying, or the work you do. Ask what's available where you're looking.
• 6
  “Student loans mean I can't buy.” What matters is how your monthly payments fit with your income, not that the loans exist. Lots of people with student loans own homes.