"My credit isn't good enough to buy a house."
I hear that at least three times a week. Sometimes from people with a 680 score. Sometimes from people with a 720. People who are more than ready to buy a home but have been told, somewhere along the way, that they're not.
So let me start there. If someone told you that you need perfect credit, a 20% down payment, and zero debt to buy a house, they were wrong. And that bad information might be the most expensive thing you've ever believed.
I'm Moe Hernandez. People call me Moe the Mortgage Lady. I'm a loan officer at CMS Mortgage, and I've spent my career helping first-time buyers get past the myths and into homes they can actually afford.
Let's talk about what the industry doesn't tell you.
Myth #1: You Need a 750 Credit Score to Buy a Home
This is the big one. The myth that keeps people renting for years longer than they need to.
Here are the actual minimums:
- FHA loans: 580 credit score with 3.5% down. Some lenders go as low as 500 with 10% down.
- VA loans: No official minimum from the VA, though most lenders want 580-620.
- Conventional loans: 620 minimum for most programs.
- USDA loans: 640 for automatic approval, though manual underwriting can go lower.
According to the Federal Reserve Bank of New York, the median credit score for new mortgage originations in Q3 2024 was 770. But "median" means half of all borrowers were below that number. People with 620s, 650s, and 680s are buying homes every single day.
The question isn't "is my credit good enough?" The question is "which loan program fits my situation?" And that's a very different conversation.
If you want to know where you stand, start here. No judgment. Just answers.
Myth #2: You Need 20% Down
I blame Dave Ramsey for part of this one. Love the guy's energy on getting out of debt. But his mortgage advice? It keeps people on the sidelines for years while home prices keep climbing.
Let me give you real numbers.
A $275,000 home with 20% down requires $55,000 cash at closing. Most first-time buyers don't have $55,000 sitting in a savings account. And waiting five more years to save it means that same home could cost $330,000 or more, based on the National Association of Realtors' historical median home price appreciation of 4-5% annually.
Now let's run it with 3.5% down through an FHA loan. That's $9,625. Add roughly $8,000-$12,000 for closing costs, and you're looking at $18,000-$22,000 to get into that same home. Still a lot of money. But a very different conversation than $55,000.
And here's what most people don't know: down payment assistance programs exist in almost every state. Many of them cover part or all of your down payment and closing costs. Some are grants. Free money. Others are forgivable loans that disappear after a few years of living in the home.
The Urban Institute reported in 2023 that over 2,000 down payment assistance programs exist across the country, yet the majority of eligible buyers never apply because they don't know the programs exist.
That's one of the biggest first-time homebuyer mistakes I see. Not applying for help that's sitting there waiting for you.
Myth #3: Pre-Qualified and Pre-Approved Are the Same Thing
They're not. And confusing them can cost you a house.
Pre-qualified means a loan officer looked at your basic information, maybe ran your credit, and gave you a rough estimate of what you might be able to borrow. It's a conversation. It's useful. But it doesn't carry much weight with sellers.
Pre-approved means a lender has verified your income, assets, credit, employment, and debt-to-income ratio. They've run it through their system and issued a conditional commitment. A pre-approval letter tells a seller, "this buyer is real. The money is real. This deal is going to close."
In a competitive market, the difference between pre-qualified and pre-approved can be the difference between getting your offer accepted and losing the house to someone else.
I tell every buyer: get pre-approved before you start shopping. Not after you fall in love with a house and panic. Before.
Why Shopping One Lender Is Like Eating at One Restaurant Your Whole Life
Picture this. You've been going to the same restaurant since you were 18. The food is fine. Not great, not terrible. Just fine. You order the same thing every time.
Then one day, someone takes you somewhere new. The food is better. The service is better. The prices are better. And you think, "why did I eat at that other place for so long?"
That's what happens when people go straight to their bank for a mortgage without shopping around.
Your bank knows you. They have your checking account. They'll approve you fast. But they have one menu. Their rates, their products, their guidelines. That's it.
At CMS Mortgage, we work with over 100 lender partners. That's 100 menus. When you come to me, I'm not offering you one option and hoping it fits. I'm comparing rates, costs, and programs across dozens of lenders to find the one that gives you the best total deal.
And that word "total" matters. Because the cheapest rate isn't always the best deal.
A lender offering 6.25% with $4,000 in lender credits might be a better deal than a lender offering 6.0% with $8,000 in closing costs. It depends on how long you plan to stay in the home, your cash reserves, and your monthly budget.
I am not an order taker. I am a recipe maker. I take your ingredients (your credit, your income, your savings, your goals) and I build the loan that works best for your situation. Not the loan that's easiest for me to process.
The Emotional Roller Coaster Nobody Warns You About
Let me get real for a second.
Buying your first home is exciting. But it's also terrifying. Stressful. Confusing. And sometimes heartbreaking.
You're going to find a house you love and lose it to a higher offer. That's going to hurt.
You're going to get a condition request from underwriting at 9 PM on a Wednesday asking for a letter explaining a $200 deposit from six months ago. That's going to feel ridiculous.
You're going to wonder, at least once, if you're making a huge mistake. If you can really afford this. If you're ready.
Here's what I tell my clients: those feelings are normal. Every single buyer goes through them. The ones with perfect credit and the ones with a 620. The ones putting 20% down and the ones using every penny of DPA they can find.
The difference is having someone in your corner who's been through this a thousand times and can talk you through it. Someone who answers the phone on a Saturday. Someone who explains things in plain language, not mortgage-speak.
Aqui estoy pa' ayudarte. I'm here to help you.
The Down Payment Assistance Programs People Miss
This is the part that really gets me going. Because there is free money out there, and people walk right past it.
Here are just a few examples of what's available in many states:
- State housing finance agency programs that offer 3-5% of the purchase price as a forgivable second loan
- City and county grants for buyers in target neighborhoods, sometimes up to $10,000-$25,000
- Employer-assisted housing programs through major employers and some small businesses
- Nonprofit homebuyer programs that combine education, counseling, and financial assistance
- FHA gift rules that allow your entire down payment to come from a family member, employer, or charitable organization
The National Council of State Housing Agencies reported that state HFAs helped over 190,000 homebuyers in 2022 alone, providing more than $4.8 billion in down payment and closing cost assistance.
And here's the thing: many of these programs can be stacked. Meaning you can combine a state DPA program with a city grant and an FHA loan with a gift from a family member. I've helped buyers get into homes with less than $1,000 out of pocket.
You read that right. Less than $1,000.
But you have to know the programs exist. And you have to work with a loan officer who knows how to find them and put them together. That's the recipe. Check out our loan options to see what might work for you.
The Real Cost Breakdown Nobody Shows You
Let's talk about a $275,000 home. Real numbers.
Monthly mortgage payment (FHA, 3.5% down, 6.5% rate): approximately $1,750 including principal, interest, mortgage insurance, property taxes, and homeowner's insurance.
Monthly rent for a comparable home in many markets: $1,695-$2,100.
So you're paying roughly the same amount per month. But when you rent, 100% of that money goes to your landlord's mortgage and your landlord's equity. When you buy, a portion of every payment goes toward building your own equity. Your own wealth.
The National Association of Realtors reported that the median existing home price increased 39% between 2019 and 2024. If you bought a $275,000 home in 2019, it could be worth roughly $382,000 today. That's over $100,000 in equity, not counting what you've paid down on your mortgage.
You can't build that kind of wealth paying rent. You just can't.
And that's what makes first-time homebuyer mistakes so costly. It's not just the money you lose today. It's the wealth you don't build over the next 5, 10, 20 years.
The Credit Score Shame Nobody Should Feel
One more thing. Because this matters to me.
If your credit score is low, you are not a bad person. You are not irresponsible. You are not a failure.
Life happens. Medical bills happen. Job losses happen. Divorces happen. Pandemics happen. And when they do, credit scores drop. That doesn't mean homeownership is off the table forever. It means you might need 6 months of work to get things in order.
I've helped people go from a 520 to a 640 in less than a year. It starts with a plan. Pay down credit card balances below 30% of the limit. Dispute errors on your report. Don't close old accounts. Make every payment on time for six straight months.
It's not glamorous work. But it works.
And I'd rather have that honest conversation with you today than let you sit on the sidelines for three more years because someone shamed you about your score. That's not who I am. I'm the person who meets you where you are and helps you figure out the next step.
Let's figure out your next step together. No judgment. No pressure. Just real talk over coffee, even if it's over the phone.
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Frequently Asked Questions About First-Time Homebuyer Mistakes
What credit score do I really need to buy a house?
You can qualify for an FHA loan with a 580 credit score and 3.5% down payment. VA loans have no official minimum from the VA, though most lenders want 580-620. Conventional loans typically require 620 or higher. You do not need a 750 or 800 credit score to buy a home, despite what many people believe.
Do I really need 20% down to buy a home?
No. FHA loans require as little as 3.5% down. VA loans and USDA loans offer 0% down payment options for eligible buyers. Conventional loans can go as low as 3% down. There are also over 2,000 down payment assistance programs across the country, according to the Urban Institute, that can reduce your out-of-pocket costs even further.
What is the difference between pre-qualified and pre-approved?
Pre-qualified is a rough estimate of what you might borrow based on basic information. Pre-approved means a lender has verified your income, assets, credit, and employment and issued a conditional commitment for a specific loan amount. Pre-approval carries significantly more weight with sellers and should be completed before you start shopping for homes.
What are the most common first-time homebuyer mistakes?
The most common mistakes include not getting pre-approved before shopping, only talking to one lender instead of comparing options, not researching down payment assistance programs, making large purchases or changing jobs during the loan process, and waiting for "perfect" credit instead of exploring current options. Working with an experienced loan officer who shops multiple lenders can help you avoid all of these.
How much money do I actually need to buy a house?
On a $275,000 home with an FHA loan at 3.5% down, you would need approximately $9,625 for the down payment and $8,000-$12,000 for closing costs. However, down payment assistance programs, seller concessions, and lender credits can reduce your out-of-pocket costs significantly. Some buyers close with less than $1,000 out of pocket by stacking available programs. Explore your options with CMS Mortgage.