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Home ownership isn’t the same American dream anymore. Since the recession, it’s important to understand exactly what’s involved with buying from a practical standpoint. However, there’s also a lot of misinformation spread about renting versus buying a house. We’re covering three common myths that are scaring away first-time home buyers. Once you know the facts, you can evaluate whether renting or buying is right for you.

Myth #1: I won’t qualify for a mortgage loan.

Many people don’t even try to buy a home because they think they would automatically be disqualified for a mortgage. It’s true that lenders are stricter about who they lend to after the recession, but almost everyone still has a chance to get approved. Here are some of the most common reasons people are denied.

• Your debt-to-income ratio is too high
• Your credit report shows missed payments or other problems
• Your down payment is too low for the mortgage you want
• You’ve made a major career change recently

If you fall under any of these categories, sit down and talk with a mortgage expert. They can predict what major pitfalls you may find when you try to get qualified and how to fix or avoid those pitfalls in advance. Establishing a relationship with your lender can go a long way towards bending their initial qualification barriers. Home ownership is not out of reach, even if you checked off one or more of the reasons above.

Myth #2: I have to stay in any home I buy for a minimum of five years.

You may have heard this ‘rule’ before. Many people are under the impression that you must stay in your home five years at least to come out ahead financially. Since the upfront costs of buying a home can put a dent in your savings, not to mention the fact that the majority of your initial mortgage payments are going towards interest instead of principal, you won’t earn back your spent money right away. The five-year period is supposed to counteract these costs through natural appreciation and building up equity by paying down the principal.

The five-year rule can scare potential home buyers away from buying if they’re worried they may not stay at least five years. While it’s easier to come out ahead the longer you stay in your home, there are ways are fast-tracking that equity. Try these strategies to make the initial investment better regardless of how many years you stay.

1) Buy less house than you can afford.

Not only will this mean a smaller down payment and closing costs, but it also gives you the opportunity to make additional payments on your mortgage each month. Paying additional allows you to pay down the principal loan balance faster, which will help you come out ahead if you have to sell before five years are up.

2) Choose a different mortgage type.

Not everyone needs the traditional 30-year fixed-rate mortgage. If you aren’t planning on staying in your home long-term, consider an adjustable-rate mortgage. This can give you a lower interest rate than a fixed-rate mortgage for the first few years of ownership. Smaller interest rates will help you pay down the principal faster.

If you want to actually crunch the numbers behind your specific scenario, try this calculator from the New York Times. It can estimate whether renting or buying will be pricier for you in the long run.

Myth #3: Renting will be cheaper than owning a home.

Public opinion regarding home ownership has shifted since the last recession. More adults are choosing to rent now than at any point since 1965. This is in part because many believe renting is actually cheaper than owning a home. Depending on your financial situation and local housing market, this could be true. However, these generalizations don’t take into account that every situation and location is different.

Buying vs. Renting Charts from the National Association of Realtors

Source: NAR

The NAR’s chart shows that a homeowner’s payment can be less than a renter’s payment after three years, counting tax savings. This is obviously a simplified formula, but it shows that owning does have the ability to cost less over time. You won’t know which option will be cheaper for you until you run the numbers.

There are also additional, non-monetary factors to consider. For many home buyers, the ability to customize their living space and have control over their own property outweighs the cost difference.

Debating renting versus buying a house?

If you’re debating which option is the better choice, the unsatisfactory answer is that it depends. When we talk about such a large purchase, it’s important not to rely on generalizations, but what is best for your individual situation. Crunch the numbers and define your priorities.

It’s important to note that buying a home is an attainable, realistic goal for most people. It isn’t out of reach, and it can be smart financial choice if you do it the right way. Don’t settle for renting without investigating your ability to purchase property.

Get more information about buying your first home

If you feel more confident that buying a home could be in your future, read our FREE guide. This guide is made for first time home buyers, walking you through everything from getting pre-approved for a mortgage to estimating closing costs. Download the home buying guide now!