Although ownership among Black households has grown over the past 10 years, they are almost twice as likely to be turned away for financing than anyone else, reveals a scrub of data from the federal Home Mortgage Disclosure Act.
The disparities aren’t uniform. Denial rates — and the gaps between Black and overall applicants — vary widely across the country. But on a national basis, an analysis by online lending marketplace LendingTree found, Black buyers were told they didn’t qualify 1.7 times as often as all other races.
The denial rate for Black applicants across the entire country was 19% in 2024, compared to just 11.27% for all applicants, a gap of 7.73 percentage points, the analysis shows.
Debt-to-income ratios that were too high was the main reason all applicants were declined last year. But credit records were the chief reason for turning away potential Black homebuyers vs. other races — 33% to 25%, and a gap of 8 points.
“Black Americans typically have significantly lower credit scores than other Americans,” said LendingTree’s Chief Consumer Finance Analyst Matt Schulz. “That gap is a really big deal and means that Black Americans, as a group, are going to have a far harder time getting a mortgage than white or Latino Americans.”
In 2021, the median VantageScore credit rating for Black consumers was 639, just slightly higher than the 620 minimum credit score required for non-government mortgages.
By contrast, the median score for white consumers was almost 100 points higher, at 730.
Additionally, Black and Latino consumers are more likely to be “credit invisible,” meaning they have little or no credit histories, than those in other racial groups.
“There’s very little in life that is more expensive than crummy credit,” said Schulz. “It can cost you tens of thousands of dollars or more over the course of your life in the form of higher interest rates and more fees. It can even keep you from getting a loan altogether.”
In what LendingTree calls a sign of progress, though, the denial rate disparity between Black and all mortgage applicants in the 50 largest metros decreased from 5.3 percentage points in 2022 to 4.8 points in 2024.
And on another positive note, the homeownership rate among Black households has increased over the past decade, as it has for all racial groups. Yet, the rate for Black continues to lag behind all other racial groups.
The national homeownership rate in 2023 was 65.2%. But it was 44.7% among Black consumers, “significantly” lower than the rate among white (72.4%), Asian (63.4%), and Hispanic (51.0%) households, LendingTree reports.
Among the 50 largest metropolitan areas, denial rates for would-be Black borrowers exceeded 10% everywhere but Salt Lake City, at 8.94%. The rate was highest in Detroit and Miami, and lowest in Salt Lake City, Seattle, and Portland, Ore.
The denial rates in two markets in Michigan — Detroit and Grand Rapids — exceeded 20%. Notably, six of the 10 metros with the lowest denial rate gaps are in just two states: California and Texas, with three such metros in each.
