Home-Buying Myths That Could Be Holding You Back Right Here in the Phoenix Metro

David Thomas | HomeSmart Realty | onlinearizonahomes.com

I have this conversation more than you might expect. Someone reaches out, we start talking about the idea of buying a home here in the East Valley, and somewhere in the first few minutes I hear something like: "I would love to buy, but I just don't think I'm ready yet."

When I ask why, the answers almost always come back to the same handful of beliefs. I need 20 percent down. My credit is not good enough. I cannot afford a real estate agent. My bank will give me the best rate.

After 30+ years working with buyers across Gilbert, Chandler, Mesa, Scottsdale, and Queen Creek, I can tell you that most of these beliefs are simply not true. They are myths -- and they are keeping real people from homeownership that is well within their reach.

Let me clear them up one by one.

Myth #1: You Need a 20 Percent Down Payment

This is the biggest one, and it stops more potential buyers than any other misconception in real estate.

The truth is that most first-time buyers put down far less than 20 percent. According to the National Association of REALTORS, the average first-time buyer puts down around 8 percent -- not 20. And there are programs available that go significantly lower than that.

Here are the options worth knowing about:

FHA loans: With a credit score of 580 or higher, you may qualify with as little as 3.5 percent down. FHA loans are one of the most common paths to homeownership for first-time buyers, and they are widely available here in the Phoenix metro.

Down payment assistance programs: Arizona has several state and local programs designed to help buyers cover down payment and closing costs. These can come in the form of grants or low-interest loans. Resources like DownpaymentResource.com are a great place to start exploring what you might qualify for.

VA loans: If you are a veteran or active-duty military member, you may be eligible for a VA loan -- which requires zero down payment. Arizona has a significant military and veteran population, and I work with buyers who use VA financing regularly.

USDA loans: For buyers looking at properties in certain rural or semi-rural areas, USDA loans can also offer zero-down financing. Some areas in and around the outer East Valley and beyond may qualify.

Gift funds: Nearly a quarter of buyers receive financial help from family or friends toward their down payment. This is completely acceptable under most loan programs -- just check with your lender about documentation requirements, as gift fund rules vary by loan type.

The 20 percent myth persists because it used to be more true than it is today. But the mortgage landscape has changed significantly, and the options available to buyers in 2025 are far more flexible than many people realize.

Myth #2: Bad Credit Means No Mortgage

A less-than-perfect credit score does not have to end your homeownership dream -- not by a long shot.

FHA loans, which I mentioned above, accept credit scores as low as 500 in some cases -- though you will need a 10 percent down payment at that level. At 580 or above, the minimum down drops to 3.5 percent.

Beyond FHA, there are a few other strategies worth considering:

A larger down payment can offset a weaker credit profile. More cash upfront reduces the lender's risk, which can help you qualify even with a lower score.

A co-signer with stronger credit can strengthen your application. This is often a family member who is willing to share responsibility for the loan. Just understand that a co-signer is equally responsible for the debt -- it is a significant commitment and should be approached thoughtfully.

And before you assume your credit is a problem, pull your free reports at annualcreditreport.com and actually look at them. I have seen buyers discover errors, outdated collection accounts, or items that should have dropped off their report years ago. Getting those corrected can improve your score meaningfully -- sometimes within a few months.

If your credit needs work, the right move is to start that process now rather than waiting and wondering. A good lender can review your credit with you and give you a concrete plan for getting where you need to be.

Myth #3: I Cannot Afford a Buyer's Agent

This one has gotten more attention recently in light of changes in how real estate commissions work. But the bottom line for buyers has not changed as much as many people think.

Commissions have always been negotiable. And in the vast majority of transactions here in the Phoenix metro, sellers are willing to cover the cost of the buyer's agent as part of the deal. That means you can have professional representation -- someone in your corner through the entire process -- without it adding to your out-of-pocket costs in most cases.

As a buyer, having an experienced agent on your side matters. I know this market. I know the neighborhoods, the builders, the contract pitfalls, the inspection process, and how to negotiate effectively on your behalf. That guidance is valuable, and for most buyers it costs them nothing directly.

Myth #4: My Bank Will Give Me the Best Rate

Your bank is convenient, and they may well offer you a competitive rate. But they are only one option -- and loyalty to a bank does not always translate into the best mortgage terms.

Credit unions, independent mortgage companies, and mortgage brokers can all offer rates and programs that your primary bank simply may not have. The only way to know is to shop around.

I always encourage my buyers to get quotes from at least two or three lenders before making a decision. The difference between rates can seem small on paper, but over the life of a 30-year loan, even a fraction of a percentage point translates into thousands of dollars.

If you use a mortgage broker, they can present you with multiple loan options at once -- which is efficient. Just understand that a broker is not automatically obligated to find you the absolute best deal unless you have a formal agreement with them. Ask questions, read the fine print, and make sure you understand what you are being offered.

Myth #5: Preapproval Means the Loan Is Guaranteed

This is an important one to understand, especially in a competitive market like ours here in the East Valley.

Preapproval is a strong signal -- it tells sellers you are financially serious and have been vetted by a lender. In a market where well-priced homes move quickly, having a preapproval letter in hand when you make an offer is essential.

But preapproval is not a guarantee. A mortgage is not final until three things happen: the seller accepts your offer, the lender officially approves the loan after the appraisal and full document review, and you have signed the closing paperwork.

Between preapproval and closing, it is critical that you avoid major financial changes -- do not open new credit accounts, do not make large purchases, do not change jobs if you can avoid it, and do not move large sums of money around without talking to your lender first. Any of these things can affect your final loan approval.

Think of preapproval as a strong first step -- not the finish line.

Myth #6: The Interest Rate Is All That Matters

A low interest rate is important. But it does not tell the whole story of what a loan actually costs you.

Fees matter. Loan origination fees, processing fees, discount points, and other closing costs can vary significantly from lender to lender -- and a loan with a slightly lower interest rate but significantly higher fees may actually cost you more over time than a loan with a slightly higher rate and lower fees.

That is why the Annual Percentage Rate -- the APR -- is such an important number to look at. The APR factors in fees alongside the interest rate to give you a true cost of the loan. When you are comparing offers from multiple lenders, comparing APRs gives you a much more accurate apples-to-apples picture than comparing interest rates alone.

Before you sign anything, review the Loan Estimate your lender is required to provide. It breaks down all the costs involved in your loan and is the document you want to use when comparing offers side by side.

The Bottom Line

Homeownership here in the Phoenix metro may be closer than you think. The barriers that feel enormous from the outside are often far more manageable once you understand the actual landscape.

You probably do not need 20 percent down. Your credit situation may have more options than you realize. You can have professional representation without paying out of pocket in most cases. And the best mortgage for you may not come from your current bank.

The key is to get informed, talk to a lender you trust, and stop letting myths make the decision for you.

If you are thinking about buying a home in Gilbert, Chandler, Mesa, Scottsdale, Queen Creek, or anywhere in the East Valley and you are not sure where to start, reach out. I am happy to walk you through exactly what the process looks like for your specific situation -- no pressure, no sales pitch, just straight answers from someone who has been doing this in the Phoenix market for a long time.

David Thomas | HomeSmart Realty