Millions of aspiring homeowners may be delaying plans to buy because of widespread misconceptions about mortgages, new research suggests.
Research from the HomeOwners Alliance indicates that many prospective first-time buyers are ruling themselves out of the housing market because of misunderstandings about how mortgages work.
The findings show persistent confusion around credit scores, deposit requirements and borrowing limits, with many would-be buyers assuming they cannot qualify for a mortgage before seeking professional advice.
CREDIT CONCERNS
Among aspiring homeowners surveyed, 65% believe having bad credit means they cannot obtain a mortgage, while 62% think a minimum deposit of 10% is required to buy a home.
Nearly half, 49%, believe the maximum they can borrow is restricted to four to five times their income, while 47% assume the lowest interest rate will automatically make a mortgage the cheapest option overall.
The research also found 40% believe arranging a mortgage with their existing bank is the best approach, and 25% think they cannot explore mortgage options until they have found a property.
According to the HomeOwners Alliance, these assumptions may be discouraging potential buyers from exploring the range of products and lending criteria currently available.
While poor credit can make securing a mortgage more difficult, it does not necessarily prevent borrowers from obtaining finance, as lenders typically assess a range of factors when evaluating applications.
DEPOSIT FEARS
Misconceptions about deposits also appear widespread. Nearly two thirds of aspiring first-time buyers believe a minimum 10% deposit is required, despite an increase in lower deposit products.
Data from Moneyfacts shows the number of low-deposit mortgage deals has reached its highest level for almost 18 years. At the start of 2026, there were 489 products available at 95% loan-to-value and 927 at 90% loan-to-value.
Although larger deposits can improve access to better rates, the perception of a fixed threshold may be reinforcing the belief that home ownership is further out of reach than it is in practice.
Borrowing limits also appear to be widely misunderstood. While many lenders have expanded income multiples beyond the long-standing four to five times salary benchmark, almost half of aspiring homeowners still believe this remains the upper limit.
The research also suggests many prospective borrowers focus primarily on headline interest rates when comparing mortgage products.
However, the overall cost of a mortgage can vary considerably once arrangement fees and other charges are taken into account. Products with lower rates can sometimes carry higher upfront fees, which may reduce or even outweigh the apparent saving.
Paula Higgins, chief executive of the property website HomeOwners Alliance, said: “Too many first time buyers are putting themselves out of the running before they have even had a proper conversation with mortgage experts about what might be possible.
“Misunderstandings about deposits, borrowing limits and how mortgages work are denting confidence at the very first hurdle.
“At the same time, some who do press ahead may be focusing on the wrong things, such as headline rates or sticking with their existing bank, rather than looking at the overall cost and the full range of options available.
“Getting clear, independent advice early on can make a real difference.”
David Hollingworth, associate director at L&C Mortgages, added: “The mortgage market changes quickly and often, so it’s understandable that many would-be buyers can find it hard to know what is and isn’t possible.
“There’s been great strides made in the last 12 months to address some of the biggest challenges that first time buyers face in saving for a deposit and being able to borrow enough to meet high prices.
“That product and criteria innovation is helping to change what could be possible. It’s therefore worth seeking advice to cut through the dizzying array of options to better understand if there are solutions that could put home ownership within reach.”
