The most pervasive misconceptions about the real estate market in San Francisco.

When you’re buying a home, especially for the first time, it’s easy to get caught up in misconceptions that can complicate the process. To help you make informed decisions, here are ten common myths about home buying – and the real truths behind them.

10 Common Myths About Home Buying in the City Debunked

Buying a home can be intimidating, especially in a market as unique as ours. Myths and misconceptions often add confusion to the process. Here are ten common myths about buying a home in the city—and the realities that debunk them.

1. You Need a 20% Down Payment

Myth: You must have a 20% down payment to buy a home.
Reality: While a 20% down payment can help you avoid private mortgage insurance (PMI), it’s not a requirement. Some lenders in the city offer loans with as little as 5% down without PMI, making it possible to buy a home without needing such a large upfront investment. Programs like these can be a major advantage in an expensive market.

2. You Need to Be a Millionaire to Buy a Home

Myth: Only millionaires can afford to buy homes in the city.
Reality: While home prices are high, there are more affordable options, particularly with condos, Tenancy in Common (TIC) properties, and multifamily units. These types of homes often come at a lower price point compared to single-family houses, making them more accessible. Many people in the city earn over $100,000 a year, which can be enough to qualify for a mortgage on a condo or TIC. You don’t need to be a millionaire—just a solid financial plan and the right guidance.

3. Your Credit Has to Be Perfect

Myth: You need excellent credit to buy a home.
Reality: While a high credit score helps with securing better mortgage rates, you don’t need perfect credit. Many lenders work with buyers who have moderate credit scores, and there are first-time homebuyer programs that offer flexibility. There are options available, even for those without stellar credit histories.

4. The Listing Price is Non-Negotiable

Myth: You have to offer the full asking price or more to compete.
Reality: The listing price is just a starting point, and with a knowledgeable real estate agent, there’s room for negotiation. Depending on the market, you can sometimes secure a home for less than the asking price or negotiate additional perks, like repairs or closing cost credits. Many contract terms are flexible, and having an agent can help you take advantage of these options to secure the best deal.

5. You Should Wait for Interest Rates to Drop

Myth: It’s better to wait for interest rates to fall before buying.
Reality: While low interest rates are appealing, waiting for them to drop can mean missing out on good buying opportunities. Home prices may rise while you wait, and there’s no guarantee rates will fall anytime soon. Plus, if rates do decrease in the future, refinancing is always an option. If you’re financially ready, it’s better to focus on the market conditions now rather than waiting for the perfect scenario.

6. The Only Upfront Cost is the Down Payment

Myth: Once you have the down payment, you’re ready to go.
Reality: The down payment is just one of several upfront costs when buying a home. In addition, you’ll need to budget for closing costs, inspections, and potential repairs. These can add up, so it’s important to be financially prepared for all aspects of the transaction. Planning ahead can help avoid last-minute surprises.

7. All Real Estate Agents are the Same

Myth: Any real estate agent will do the job.
Reality: Not all agents have the same expertise, especially in a competitive and complex market. Finding an agent with local experience is key. They can offer valuable insights into different neighborhoods, help you navigate bidding wars, and ensure you don’t overpay. A knowledgeable agent is an essential asset in the buying process.

8. You Should Buy the Biggest House You Can Afford

Myth: Bigger is always better when it comes to buying a home.
Reality: Just because you qualify for a larger mortgage doesn’t mean you should stretch your budget. Consider what works best for your lifestyle and financial goals. A smaller home in a more desirable neighborhood might be a better fit, or perhaps a home with lower maintenance costs. It’s essential to look beyond square footage and focus on what adds value to your life.

9. A 30-Year Fixed Mortgage is Always the Best Choice

Myth: A 30-year fixed mortgage is the ideal choice for everyone.
Reality: While a 30-year fixed mortgage offers stability, it’s not always the best option. If you plan to sell or move in a few years, an adjustable-rate mortgage (ARM) could offer lower initial payments and be more cost-effective. Always explore your options and choose a mortgage that fits your plans.

10. You Shouldn’t Buy a Fixer-Upper

Myth: Buying a fixer-upper is too risky and costly.
Reality: Fixer-uppers can be a great way to enter the market, especially in desirable areas where fully renovated homes might be out of budget. With the right financing options, like renovation loans, you can cover the costs of upgrades. Additionally, making your own updates can allow you to build equity and add personal touches to your home.