Deposits, LTIs and adverse credit: Common first-time buyer misconceptions revealed

Would-be first time buyers are being held back by widespread confusion about mortgages, according to new research from the HomeOwners Alliance.

The research found that 65% of first-time buyers believe having bad credit means you cannot get a mortgage.

Confusion is almost equally pronounced around deposits. Nearly two thirds of aspiring first-time buyers (62%) believe a minimum 10% deposit is required, despite the growing availability of lower deposit and no deposit products. Moneyfacts reports the number of low-deposit mortgage deals is at its highest level for almost 18 years, with 489 products at 95% LTV and 927 at 90% LTV to choose from at the start of 2026.

And despite several major lenders increasing income multiples beyond the long standing 4 to 5 times salary benchmark, almost half of aspiring homeowners (49%) still believe that is the maximum they can borrow. 

And nearly half of aspiring homeowners (47%) focus primarily on headline interest rates when comparing mortgage deals.

In addition, first-time buyers are more likely than the wider public to assume their best option is to arrange a mortgage through their existing bank (40% compared with 26% overall).

Prospective first-time buyers also report lower levels of confidence about the mortgage process itself. A quarter (25%) believe they must secure a property before exploring mortgage options, compared with 16% of adults overall. 

Paula Higgins, chief executive of 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.”