Most middle-income renters say buying a home feels out of reach.
Many overestimate how much money, income, and credit it takes to qualify for a mortgage.
Experts say better information — not just more savings — could help more renters become homeowners.
For many middle-income Americans, buying a home feels more like a distant goal than an achievable milestone. Rising home prices, higher mortgage rates, and the increasing cost of everyday living have left many renters wondering if they'll ever be able to afford a place of their own.
In fact, a new survey from Neighbors Bank found that most middle-income renters believe homeownership is out of reach — and many aren't even sure what's actually required to qualify for a mortgage.
To better understand why so many potential buyers feel discouraged, ConsumerAffairs spoke with Ashley Harris, Director of Homebuyer Education at Neighbors Bank. She explains that while affordability challenges are very real, misconceptions about down payments, credit requirements, and the homebuying process may also be keeping qualified buyers on the sidelines.
Key findings
For the study, Neighbors Bank surveyed 1,011 middle-income renters across the country. The researchers defined middle-income as a household income between $40,000 – $125,000.
Here are some of the key findings from the survey:
Nearly 45% of renters earn more than their parents did at the same age, but still can't afford a home.
Nearly 65% say the dream of homeownership feels out of reach for people like them.
Nearly 25% have stopped saving for a home or never started.
Assumptions vs. reality
Harris said the gap between what renters think it takes to buy and what it actually takes was one of the biggest surprises from the survey.
“The median respondent believed a starter home requires a 20% down payment, a 675 credit score, and roughly $88,000 in household income,” she said. “That income is about 40% higher than what they're currently earning.”
Importantly, Harris explained that there are options for those interested in buying a home. Some of these include:
FHA loans go as low as 3.5% down with a 580 credit score.
USDA and VA loans offer zero down payment for eligible buyers.
Conventional 97 loans bring the minimum to 3% for eligible first-time buyers.
“People aren't failing to qualify because the math doesn't work to buy a house,” she said. “They are ruling themselves out before they ever run the actual numbers.”
Challenging outdated assumptions
Based on the survey data, Harris believes one of the biggest things affecting middle-income earners in the homebuying market is a lack of information.
“Renters are carrying outdated assumptions about what qualifying actually requires, and that alone is enough to make an achievable purchase feel out of reach,” she said.
“It's up to us and our team to help people understand a very complicated industry. Education and support have to be foundational to our culture at every stage of the mortgage process.”
Financial preparation
If you’re thinking about entering the homebuying market but you’re not sure if you even should be, Harris has some advice.
“The most important shift is to stop preparing in isolation and start the conversation early,” she said/ “A lot of renters treat ‘talk to a lender’ as the finish line, something you do once you're already ready, when it should be the starting point. Start it early, prepare, and plan around what an actual lender tells you rather than what you assume they'll say.”
Another piece of advice: Don't rush to pay off debts before you talk to a lender. Harris explained that your debt-to-income ratio is what drives whether or not you potentially qualify for a mortgage, and some installment debts can be omitted entirely depending on how many payments are left.
“Paying off the wrong balance, or draining savings to do it, can leave you worse positioned than if you'd asked first,” Harris said/ “A loan officer can tell you which debts actually move your ratio and which ones don't matter.”
Lastly, don't assume you can't do it!
“Check your numbers against the real minimums instead of the rule of thumb you've heard,” she suggested. “And actually look into homebuying assistance programs, because almost half of respondents in our survey had never researched a single one in depth, despite 90% knowing at least one existed.”