A new survey from FICO suggests confusion about the homebuying process and the role of credit may be creating another hurdle for prospective borrowers.
According to FICO's new Homeownership Survey, 74% of prospective homebuyers said financial obstacles prevented them from purchasing a home this year, with high home prices (34%) and elevated mortgage rates (33%) ranking as the two biggest barriers. Among first-time buyers, 85% said financial challenges had delayed their plans.
The survey, conducted by The Harris Poll on behalf of FICO, found that 62% of Americans who do not currently own a home believe homeownership is out of reach, while just 15% said they expect to purchase a home within the next 12 months.
But beyond affordability, the research points to a significant education gap that could present an opportunity for mortgage professionals.
Nearly three in five Americans (59%) said they do not completely understand the steps involved in buying a home, a figure that rises to 64% among first-time buyers. Although 84% said they understand that credit scores affect mortgage eligibility, about 22% either underestimated or were unsure how much their credit score influences the interest rate they receive.
The survey also found that 17% of prospective buyers have not taken steps to improve their credit before purchasing a home, while 26% said they have not encouraged a co-applicant to improve their credit profile.
"Buying a home is one of the most significant financial decisions a person can make, yet for many Americans, rising home prices and interest rates are putting that goal further out of reach," said Jenelle Dito, vice president of consumer empowerment and partnership at FICO. "These economic pressures aren't just discouraging buyers — they're fundamentally changing how Americans plan and prepare for this milestone."
Dito added that consumers do not need to wait until they begin the mortgage application process to improve their financial readiness.
"By better understanding their FICO Score and the role it plays in mortgage access and affordability, they can start building a stronger foundation for homeownership," she said.
The findings arrive as the mortgage industry continues to prepare for the eventual implementation of updated credit-scoring models at the government-sponsored enterprises. In recent weeks, Fannie Mae and Freddie Mac released historical loan performance data for FICO Score 10T, while MISMO published implementation guidance to help lenders, mortgage insurers and technology providers prepare for the transition to FICO Score 10T and VantageScore 4.0.
Although affordability remains outside a lender's control, educating borrowers on credit-improvement strategies, mortgage qualification, and financial preparation may help prospective buyers move closer to homeownership as market conditions improve.
The survey also found that rising interest rates have influenced the homebuying decisions of 73% of prospective buyers and 81% of first-time buyers. Many respondents said they are either exploring more affordable housing markets or delaying their purchase plans altogether.
Despite those challenges, Americans continue to associate homeownership with long-term financial security. Fifty-seven percent said owning a home represents independence, while 53% said it symbolizes financial stability. Among first-time buyers, nearly half (49%) viewed homeownership as a major life milestone.
