Ninety percent of renters say they expect to buy a home in the future, but the majority is fearful of their ability to qualify for a mortgage at today's stringent underwriting standards, according to a new survey conducted by Fannie Mae.
In fact, 42 percent of those who intend to buy a home one day say they don't think they'll be able to do so for at least five years.
"Younger renters who prefer to own are much more likely than their older counterparts to say that they are renting mainly to make themselves financially ready to own," according to the survey.
The majority of renters surveyed said that if they had trouble qualifying for a mortgage, they would take steps to improve their credit score or financial situation, or consider buying a less expensive home. Only a quarter of renters said that if they were denied a mortgage, they would stop pursuing a mortgage altogether.
The survey showed that renters believe home ownership is better than renting in terms of privacy, security, and for raising a family. Fifty-one percent of renters say that owning makes more sense than renting when comparing both the financial and lifestyle benefits, according to the survey.
"The strength of the economy, particularly job creation and real income growth, as well as the favorability of credit conditions should play significant roles in determining if and when many of these renters will see the fruit of their efforts to become homeowners," said Sarah Shahdad, analyst of Economic & Strategic Research at Fannie Mae.