Veterans United survey finds homebuyers overestimate credit score and down payment

Many prospective homebuyers are sitting on the sidelines unnecessarily because they overestimate the credit scores, down payments and rate conditions needed to qualify for a mortgage, according to survey data released Monday by Veterans United Home Loans.

The online survey, conducted in March 2026 by research firm Sparketing on behalf of Veterans United, polled 400 veterans and civilians who plan to buy a home in the next three years.

More than half of respondents (57%) believe a credit score of at least 660 is needed to qualify for a mortgage, and 34% think the bar is even higher at 700 or above. In practice, many buyers can secure financing with scores around 620, and some loan programs permit even lower scores.

Misconceptions extend to cash-to-close. Nearly half of would-be buyers (46%) think a conventional loan requires more than 5% down, and 15% believe a 20% down payment is required. About 31% of respondents said you cannot buy a home without a down payment.

In reality, conventional loans often start at 5% down, with some first-time buyers eligible for 3% down. Federal Housing Administration (FHA) loans require 3.5% down, while U.S. Department of Veterans Affairs (VA) and U.S. Department of Agriculture (USDA) loans do not require a down payment.

“When buyers think they need perfect credit or a huge down payment, they can take themselves out of the game before they even get started,” Chris Birk, vice president of mortgage insight at Veterans United, said in a statement. “The truth is there are flexible loan options designed to help people buy sooner, often with less upfront cash and more forgiving credit requirements than they expect.”

Wide confusion on who sets mortgage rates

The survey found similar misunderstandings about how mortgage rates work and who controls them.

About 66% of respondents said you need near-perfect credit to secure the best interest rates. At the same time, 61% believe the government directly dictates the rates lenders can offer, and 66% think the Federal Reserve sets mortgage rates outright.

In practice, individual lenders set their own rates based on secondary market pricing, risk, costs and competition. The Fed influences overall economic conditions and expectations, which can affect mortgage pricing, but it does not publish mortgage rate sheets.

Government-backed loan products often offer some of the lowest average rates in the market, including for borrowers who do not have top-tier credit. VA loans are commonly available to borrowers with a 620 credit score, and FHA loans can be made to borrowers with scores as low as 580, the company explained.

Survey responses also suggest many buyers lack a historical context for current borrowing costs. About 63% of respondents believe mortgage rates are at their highest point ever, even though the average rate was roughly 6% during the survey period. By comparison, Freddie Mac data shows rates exceeded 10% for much of the late 1970s through the early 1990s and peaked at 18.6% in October 1981.

“Mortgage rates aren’t one-size-fits-all — they can vary significantly based on the lender, the loan program and the borrower’s overall profile,” Birk said. “That’s why it pays to shop around and compare rates, costs and fees among multiple lenders. And while the Federal Reserve plays an important role in the broader economy, markets are typically pricing in expected Fed moves well before any official decision is announced.”

High confidence, low accuracy

Despite the factual gaps, more than half of respondents (56%) say they are very or extremely knowledgeable about homebuying. That confidence contrasts with persistent misunderstandings about basic concepts like credit thresholds, minimum down payments and rate setting.

At the same time, demand for homeownership remains strong. Nearly 9 in 10 prospective buyers (87%) said owning a home is one of the most important goals in life.

“Getting good information early can make a meaningful difference,” Birk said. “When buyers understand what’s actually possible, they’re in a much better position to make confident, informed decisions about when and how to move forward.”

This article was generated using HousingWire Automation and reviewed by a HousingWire editor before publication. The system helps convert company announcements and industry data into HousingWire-style news coverage.