No. That is the biggest myth keeping first-time buyers out of the market. FHA loans require as little as 3.5 percent down. Conventional loans start at 5 percent down. VA loans for veterans and USDA loans for eligible rural areas both offer 0 percent down. Talk to a lender first to find out which programs you qualify for.
A 706 credit score is considered very good. Some lenders can approve loans for buyers with credit scores as low as 580 to 600. Your credit score affects which loan programs you qualify for and what interest rate you get. Higher scores unlock more options and lower rates.
Usually not. When rates drop, more buyers come out at the same time, demand spikes, inventory drops, and home prices rise. You might save on rate but pay more for the home and face bidding wars. Rates around 5.5 to 7 percent are historically strong. In fall 2026, listings sit 30 to 60 days on market, sellers offer price reductions, and buyers have negotiating power that vanishes if rates drop.
Yes, often. Many loan programs allow buyers to ask the seller to pay some or all of the closing costs. Your lender will tell you exactly how much you can request. In some cases first-time buyers reach the closing table with almost no money out of pocket by combining a low down payment loan with seller-paid closing costs.
The down payment is your equity contribution to the purchase. Closing costs are transaction fees to the lender, appraisal, title, taxes, and other services. Even zero-down loan programs still have closing costs. Budget for both when you are planning how much cash you need at the closing table.
Talk to a lender before you look at any houses. The lender evaluates your income, debts, credit, and job history, then tells you what loan programs you qualify for, how much you can borrow, what your monthly payment would be, and how much seller-paid closing cost help you can request. That conversation shapes every other decision you make.
Yes. FHA and VA loans require the property to meet condition standards. Older or fixer-upper homes may not qualify for FHA or VA financing but work fine for conventional loans. Your loan type shapes your list of viewable properties, so knowing the loan first prevents wasted time on homes that will not appraise or close.
Yes. Mortgage rates in the 5.5 to 7 percent range are historically strong and aggressive. The 3 percent rates of the COVID era were a historical anomaly not expected to return. Rates in the mid-6 range give buyers time to shop carefully, avoid bidding wars, and often negotiate price reductions from motivated sellers.
Maya: Hi, Teresa. Thanks for having me. I am Maya. I will be honest, I almost backed out of this because I do not really know anything about buying a house, and I did not want to sound stupid on a recording. But I figure if I am confused, other people probably are too. So can I just ask you stuff?
Teresa: Of course. Ask me anything you want.
Maya: Okay. Sorry if this is really basic. Do I actually need 20 percent down to buy a house?
Teresa: That is a great question actually, and that keeps a lot of people from even trying to buy a home because they think they have to have 20 percent down, and many times that is actually not the case. There are options for only having three and a half percent down or 5 percent down, and in some instances, you actually do not need any money down to buy a home.
Maya: Are you serious? I thought it was 20 percent. Wait, so how would I know which of those options I could actually qualify for?
Teresa: We have lenders that we work with regularly, but you may already have a lender at your bank, maybe where you have your checking or savings account. But basically, the first step is to speak with a lender and find out what you are qualified for, and they will be able to tell you how much money you are going to need out of pocket, if any. Plus, they will be able to let you know what your anticipated closing costs are. When you buy a home, there are two different things you are looking at. You are looking at a down payment, and then you are looking at your closing costs. And with some of the loans, you have as little as 0 percent down, but then you would still have closing costs on the back end.
So that is why it is so important to talk to a lender because there are several things they look at to determine how much money you need down and how much your closing costs are going to be.
Maya: Okay, hold on. So my 9,200 dollars might have to cover both the down payment and the closing costs?
Teresa: Possibly, and that is why it is so important to talk to a lender first because you really need to know what payment you are comfortable with, what your price range is, how much you are going to need in a down payment, and how much you are going to need in closing costs. The good news is that even though there are loans that exist that allow you to put three and a half percent down or 5 percent down or sometimes 0 percent down, there are also many programs that allow you to ask the seller to pay for a portion of or all of your closing costs as well. So it is not highly unusual for someone to be able to get to the closing table with very little money out of pocket.
Maya: Wait, the seller can sometimes pay some or even all of my closing costs? How would I know whether I could ask for that on a particular house?
Teresa: Well, it all starts with the lender, because you have a conversation with your lender, and the lender is going to be able to tell you exactly what you qualify for, and they are also going to be able to tell you how much closing costs you can ask a seller to pay for you. And that way, when we get started, we know what type of loan you are getting, what we are going to need to ask the seller to pay for, and we also need to know what types of properties to look for. Because if you are getting, say, an FHA or a VA loan, if you happen to be a veteran, then those properties usually need to be in a little better condition than, say, a property that would, you would be getting a conventional loan on.
So there are so many things that go into the initial search that we start with the lender, and by the time you are finished getting pre-qualified with the lender, you are going to know how much money you are going to need out of pocket, what your monthly payment is going to be, and how much of the closing costs we can ask the seller to pay for so that you are truly going to have a really good idea of how much money you are going to need to get into a home before we ever even start looking at the homes you are excited about.
Maya: Okay. That makes me feel a little better. With my credit score being 706, is that something a lender would consider decent, or should I wait and try to raise it first?
Teresa: I actually think 706, that is a very specific number. That is great that you know it. But really, 706 is considered a really good credit score, and I have actually heard of lenders that can do certain loans for people with credit as low as 580 to 600. So you are well above the low end of that. And a lot of times, your credit score has an impact in what types of loans you qualify for, as well as what your interest rate is going to be. So those are, again, things that the lender will be able to evaluate and tell you how that is going to help you with the final cost for you.
Maya: 706 is actually good? Okay. Wow. My dad keeps telling me to wait until interest rates come down. So how do I know whether waiting is smarter?
Teresa: Well, just like with anything else, for every action, there is an equal and opposite reaction, which is a very famous formula in physics. And so when you wait for the rates to go down, what happens when the rates go down is a lot of buyers come out and a lot of buyers start buying homes, and that drives up the demand, which starts to drive down the supply. And we all know what happens when demand is high and supply is low, the cost goes up. And so while it is great to have a lower rate, you actually have to look at what the reaction to that action is, and that is sometimes a harsher market where you might have to get in bidding wars for houses. The cost of houses themselves might go up.
And so there is a benefit when you are in a market like this where you actually have great interest rates. And that is a misconception a lot of people have. They look back at COVID, at those rates and think that we are supposed to wait for those rates to come back. But that is really probably a historical anomaly that you are never going to see again. And so what you want to look for are reasonable and strong rates, and really anything 6 percent around the, anywhere five and a half, six and a half, 7 percent range is considered a historically very strong and aggressive rate. And so when you are in that range, then you start to see the market balance out a little bit, where you actually have time to actually look at a few properties and not get in bidding wars for them. And the home prices do not actually keep going up and up and up. They sort of balance out, and sometimes sellers even have price reductions.
So right now, while we have these interest rates at about six and a half, what is happening is you are actually seeing some sellers have price reductions on their homes, and you are actually seeing homes sit on the market 30 and 60 days instead of going into multiple offer situations within 24 to 48 hours of going on the market. And so there is a lot to consider there, but this is actually strategically a very good time to look at homes, because if you wait for those rates to go down, you are going to come jumping out of the chute with everybody else, and that could end up costing you more in the end.
Maya: Okay. Hold on. 6.5 percent can still be considered a strong rate historically? What would that make the monthly payment on a house I could afford?
Teresa: Well, again, that is going to be something that we are going to defer to the lender on, because when the lender looks at your entire financial situation, such as what your monthly debts are, what your monthly income is, your credit score, how long you have been on your job, there are all kinds of things that the lender actually looks at, and then they look at all the different types of loans that are available, and then they ask you, what is your most important factor? Are you looking for less money out of pocket? Are you okay with a little bit of a higher monthly payment if you can put less money out of pocket and leave more money in your savings? Or are you in a situation that you would rather put a little more money down and try to get a lower rate? So the lender is going to evaluate multiple facets of your financial situation, and they are going to be able to tell you, like, hey, if you pick this, this amount out of pocket, then you are probably looking at a payment of this.
Teresa: Okay, guys, I am sorry, but we have to end right here at this point, due to time. But if you hear yourself asking a lot of the same questions that Maya was asking today, then you are ready to have a conversation about buying a home. It is that simple. So please give me a call, Teresa Overcash, at 336-262-3111. I work with Realty ONE Group Results, and I would love to help you. Thank you. Bye.
If you found yourself nodding along with Maya's questions, you are exactly the buyer I love working with. Call or text me at 336-262-3111, or email teresatedder@gmail.com. We start with a lender conversation so you know your real numbers before you ever tour a home. 30 years and over 10,000 NC closings behind every step.