Homeownership remains a cornerstone of the American Dream, but for many, it feels increasingly out of reach. According to KB Home’s second annual survey for National Homeownership Month, 89% of Americans report feeling anxious about being able to afford a home. Yet despite those concerns, 83% still say that owning a home is a vital life milestone.
While rising interest rates and limited housing supply are largely outside individual control, there’s one crucial factor buyers can influence: their understanding of the homebuying process.
And that’s exactly where many are falling short.
The survey uncovered a widespread lack of knowledge around mortgages, financing terms, and loan qualifications: Basics that could spell the difference between feeling stuck and moving forward with confidence.
“This year’s survey shows that the dream of owning a home is still very real, even if many people are unsure how to get there,” shares Rob McGibney, president and chief operating officer of KB Home shared via press release.
From mortgage myths to missing financial vocabulary, here’s where many prospective buyers are getting it wrong, and how better information could make all the difference.
Mortgage rate misconceptions
Roughly 69% of U.S. adults believe mortgage rates are the highest they’ve ever been. But while today’s rates are elevated compared to the record lows of the pandemic and post-2008 crash, they’re still below the historical average of 7.7%.
This widespread misconception can discourage buyers from moving forward, worried they’ll be stuck with a “bad” rate. In reality, today’s 30-year fixed rates are nowhere near the 18.6% peak seen in 1981.
More importantly, it’s unrealistic that rates will return to 3% in the near or even middle future, according to experts we spoke with. That could mean qualified buyers put off homebuying so long, they risk staying on the sidelines forever.
Missing key terms
Home financing can be confusing, and not understanding the basics can cost you.
Nearly half of prospective buyers don’t know what core terms like APR (Annual Percentage Rate) (49%) or PMI (Private Mortgage Insurance) (44%) mean, according to KB Home’s survey. These aren’t just technicalities, these terms directly affect how much a buyer will pay over the life of their loan, and what upfront costs they'll face.
That lack of knowledge extends to other critical facts: Only 37% of respondents knew that a 20% down payment isn’t required, and just 25% were aware that borrowers with credit scores in the 500s can still qualify for a mortgage.
This knowledge gap can lead eligible buyers to overestimate the barriers to entry and miss opportunities to purchase a home with favorable terms.
Lack of advice
For many Gen Zers and millennials, the hardest part of buying a home isn’t the mortgage paperwork or saving for a down payment; it’s knowing where to begin.
According to KB Home’s survey, 25% of Gen Z and 23% of millennial respondents said they felt anxious about where to start the homebuying process. Nearly as many (20% of Gen Z and 18% of millennials) said not having a trustworthy source of advice contributed to their stress.
That’s more than a confidence issue. Without credible guidance, young buyers are more likely to fall prey to misinformation, overlook financial options that could work in their favor, or delay entering the market entirely.
And as federal consumer protection agencies like the CFPB face political and legal headwinds, reliable, unbiased resources are only becoming harder to find, just when the next generation of homebuyers needs them most.
What to know
If you’re planning to buy a home, or even just thinking about it, brushing up on the basics can make a real difference. Here are some of the most common misunderstandings that could be holding you back:
Mortgage rates aren't at historic highs. While rates have risen from the historic lows of the pandemic, they’re still well below the 1980s peak of 18.6% and even under the long-term average of 7.7%. Waiting for them to "come down" may not be necessary or wise, depending on your situation.
You don’t need a 20% down payment. Many loan programs, including FHA loans, allow for much smaller down payments. In fact, you may be able to buy with as little as 3.5% down—or sometimes even less with special programs.
A lower credit score doesn’t automatically disqualify you. While better credit typically means better rates, some lenders will work with borrowers in the 500s, especially for government-backed loans. Don’t assume you’re out of the running without checking and investigating programs specifically for people with low credit scores.
Understanding APR and PMI can save you thousands. APR reflects the true cost of borrowing, while PMI protects lenders—not you—in the event that you default on your loan, and is often required if you put down less than 20%. Knowing how these work helps you compare loan offers and plan for monthly costs more accurately.
Reliable advice matters. If you're unsure where to begin, seek out trusted, unbiased sources—like HUD-certified housing counselors or nonprofit financial educators. Social media and TikTok might make it feel easy, but misinformation is rampant, and good decisions require good data.
In this market, it’s more important than ever to arm yourself with the facts. You don’t need to know everything, but knowing the right things can help you make smarter, more confident decisions. In a time when affordability is tight and anxiety is high, understanding your options is one of the few things fully in your control.
Read more at Realtor.com
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