Homebuying 101: Mortgage Myths May Be Holding Buyers Back As Market Begins to Shift In Their Favor, Veterans United Home Loans Survey Finds

May 4, 2026

COLUMBIA, Mo., (May 4, 2026) — Widespread misconceptions about credit scores, down payments and mortgage rates are holding prospective homebuyers back just as housing market conditions start to shift in their favor, according to a survey released today by Veterans United Home Loans.

With affordability still a significant hurdle for many buyers, confusion about mortgage rates stands out: 61% of respondents believe the government dictates rates and 66% of those surveyed think the Federal Reserve sets them, revealing a fundamental misunderstanding of how borrowing costs are actually determined.

The survey findings also suggest many buyers may be overestimating what it takes to qualify for a mortgage and secure competitive financing, even in today’s challenging environment.

“Many prospective buyers are setting their expectations higher than they need to, which can delay or even derail their homebuying journey,” said Chris Birk, vice president of mortgage insight at Veterans United. “The reality is that loan programs are often more flexible than people realize, especially when it comes to credit scores, down payments and interest rates. Understanding what’s actually possible can help buyers move forward with confidence.”

Credit scores

More than one-third of respondents (34%) believe a credit score of 700 or higher is required to qualify for a mortgage, while 57% think at least a 650 score is necessary. Additionally, 66% believe you need near-perfect credit to secure the best interest rate.

Many loan programs allow buyers to qualify with credit scores around 620, and sometimes lower. Although higher scores can help borrowers access better rates, near-perfect credit is not required to secure competitive financing.

Government-backed loans often offer some of the lowest average rates in the market, even for buyers without elite credit. VA loans, for example, are commonly available to borrowers with around a 620 score, and FHA loans can be made with scores as low as 580.

Down payments

Nearly one-third of prospective buyers (31%) said you can’t buy a home without a down payment. At the same time, 46% think conventional loans require more than 5% down and 15% of buyers believe a 20% down payment is mandatory.

Down payments requirements are often far lower than buyers expect. Conventional loans can require as little as 3% down for qualified first-time buyers. FHA loans require just 3.5% down, while VA and USDA loans don’t have a down payment requirement.

Mortgage Rates

Misunderstandings persist around mortgage rates. Rates are set by individual lenders and can vary widely based on the borrower’s financial profile, loan type and market conditions. While the Federal Reserve influences the broader economic environment, it does not directly set mortgage rates.

The survey found that many would-be buyers appear to lack historical perspective on today’s rate environment. Nearly two-thirds of respondents (63%) said they believe mortgage rates are higher than they’ve ever been. Average mortgage rates hovered around 6% when the survey was conducted.

In reality, today’s rates remain well below historic peaks. Mortgage rates climbed above 10% for much of the late 1970s through the early 1990s, reaching a high of 18.6% in October 1981, according to Freddie Mac.

Confidence Remains High Despite Knowledge Gaps

Despite these misunderstandings, confidence among prospective buyers remains strong. More than half of those surveyed (56%) said they are very or extremely knowledgeable about the homebuying process, even as many misunderstand key fundamentals.

Still, the desire for homeownership is clear: 87% of respondents say owning a home is one of the most important goals in life,

“Getting accurate information early in the process can make a meaningful difference,” Birk said. “When buyers understand what’s actually possible, they’re better equipped to make informed decisions and take advantage of opportunities in the market.”

To view the full survey, visit https://www.veteransunited.com/education/mortgage-...

About Veterans United Home Loans
Veterans United Home Loans, a full-service national direct lender based in Columbia, Missouri, closed more than $26 billion in loans in fiscal 2025 and was the nation’s No. 1 VA purchase lender, according to Department of Veterans Affairs Lender Statistics. The company's mission is to help Veterans and service members take advantage of the home loan benefits earned by their service.

VeteransUnited.com | 1-800-884-5560 | 550 Veterans United Drive, Columbia, MO 65201 | Veterans United Home Loans NMLS # 1907 (www.nmlsconsumeraccess.org). Private lender. Not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency. Licensed in all 50 states. Military advisors are paid employees of Veterans United. For State Licensing information, please visit www.veteransunited.com/licenses. Equal Housing Opportunity