A Neighbors Bank survey finds misinformation rivals home prices as a barrier to buying
A faulty understanding of mortgage requirements may be keeping more Americans out of the housing market than home prices themselves, according to new survey data that lays bare a stubborn perception gap among moderate-income renters.
Neighbors Bank surveyed 1,011 moderate-income renters — households earning between $40,000 and $125,000 annually — and found that 84% overestimate the minimum down payment required to buy a home.
More than half (55%) believe a 20% down payment is the floor. And 94% were unaware that Federal Housing Administration (FHA) loans are available with as little as 3.5% down for borrowers with a credit score of 580 or higher.
The median respondent estimated that buying a starter home required a 20% down payment, a 675 credit score, and an $88,000 household income, roughly 40% above what most respondents said they currently earn.
The income paradox
The survey adds a sobering dimension to the existing affordability conversation. Nearly 44% of middle-income renters said they out-earn their parents at the same age but still cannot afford comparable housing.
Nearly 3 in 5 (57%) said homeownership feels out of reach for people like them, and 60% said the mortgage industry isn't designed for buyers at their income level.
The findings land as government-backed products continue to absorb a growing share of purchase activity. As a Realtor.com report showed, FHA's share of purchase mortgages has held above 24% for five consecutive quarters, the most sustained elevated stretch since 2016.
Yet awareness of those programs remains strikingly low among the buyers they are built to serve.
Mike Fratantoni, chief economist at the Mortgage Bankers Association (MBA), has addressed the disconnect directly. In a previous interview with Mortgage Professional America, Fratantoni said, "Just like it has been for decades, it is tough for someone to break into the market. Thankfully, there are a range of different financing options, and now a range of different down payment assistance programs and other methods to help somebody get in."
The information gap brokers can close
When asked where they turn first with a homebuying question, 36% said Google or a general internet search, 15% said friends or family, and 9% said AI tools. Only 6% named a mortgage lender or loan officer.
Among Gen Z renters — 83% of whom said they expect to own a home in their lifetime — just 2% went to a mortgage professional first, making them ten times more likely to ask friends or family before consulting an expert.
Nearly half of all respondents (46%) had never researched a single homebuying assistance program in depth, even though 90% said they were aware at least one exists.
Data tracking first-time buyer income trends throughout 2025 shows median borrower incomes rising to $77,208, well within the qualifying range for programs most renters aren't pursuing.
Meanwhile, affordability data from the second quarter of 2026 signals that the window for entry-level buyers may be narrowing again after a brief improvement, adding urgency to the knowledge gap.
For brokers, the Neighbors Bank findings suggest education, not just rate comparisons, may be the most effective conversion tool in the current market.
As the survey found, 68% of middle-income renters said they would not buy a home this year even if a relative covered half the down payment.
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