Barriers to Homeownership: An Analysis of Mortgage Loan Denials

Homeownership is a wealth building strategy among households in the United States. Racial minority households face a variety of challenges to homeownership including being approved for a mortgage. This study examined mortgage loan denial by race using the 2019 Housing Mortgage Disclosure Act data for Travis County, Texas. Logistic regression results showed that Black, Hispanic and Asian applicants were significantly more likely to report having been denied a mortgage loan than White applicants. Common reasons for loan denial among racial minority applicants included debt-to-income ratio, credit history, and insufficient cash for the down payment. FCS professionals are well positioned to help households adequately prepare to qualify for a mortgage or to help households pursue other avenues of wealth building when homeownership is not a viable option.