According to a recent Zillow examination of Home Mortgage Disclosure Act data, black applicants are denied mortgages at higher rates than white applicants in each of the 50 largest U.S. metro regions. However, that disparity isn’t always the biggest in areas with the highest housing values. Rather, greater financial disparities between Black and white applicants before they ever enter a lender’s office are linked to broader denial discrepancies across U.S. markets.
Unaffordable marketplaces are thought to be the source of the worst racial disparities. The data does not support that. The Black-white mortgage denial disparity is actually greater in lower-cost metro areas and narrower in high-cost than others throughout the 50 largest U.S. metro areas. Denial differences are typically lower in markets with greater average loan sizes, higher median household incomes, and higher typical home values. That simply indicates that the racial disparity in who is turned away is more narrowed in pricey, popular metro areas than in comparatively less expensive ones.
Therefore, the question posed is, “Why do more reasonably priced markets have larger denial gaps?” Experts revealed that the financial profiles of applicants, particularly income disparities and debt loads, exhibit the strongest correlations.
The refusal gap was larger in metropolitan areas where Black applicants made much less than white applicants. The same pattern applied to debt loads: the denial gap was greater in areas where Black applicants were more likely to have debt-to-income ratios over 50%. Further, when local market conditions are taken into consideration, both of these linkages are still present.
Black–White Mortgage Denial Gaps (2025):
| Rank | MSA | Median HH income | ZHVI | Black applicant median income | White applicant median income | Share of Black applicants with DTI>50% (%) | Share of White applicants with DTI>50% (%) | Black denial (%) | White denial (%) | B–W gap (pp) |
| 1 | New Orleans | $64,484 | $254,995 | $70,000 | $126,000 | 18.4 | 4.1 | 40.2 | 8.7 | 31.5 |
| 2 | Detroit | $78,983 | $261,610 | $66,000 | $97,000 | 12.8 | 5.4 | 36.6 | 12.1 | 24.5 |
| 3 | Jacksonville, FL | $84,653 | $354,582 | $69,500 | $125,000 | 19.6 | 6.1 | 35.5 | 11.3 | 24.2 |
| 4 | Oklahoma City | $75,949 | $243,592 | $69,000 | $101,000 | 16.1 | 7.7 | 38.9 | 17.4 | 21.5 |
| 5 | Raleigh, NC | $105,987 | $442,047 | $98,000 | $141,000 | 12.0 | 4.1 | 23.9 | 5.2 | 18.7 |
| 6 | San Antonio | $81,118 | $282,577 | $85,000 | $118,000 | 21.5 | 10.0 | 34.1 | 15.5 | 18.6 |
| 7 | Memphis, TN | $70,091 | $244,393 | $76,000 | $116,000 | 11.9 | 3.2 | 25.3 | 7.0 | 18.3 |
| 8 | Richmond, VA | $85,219 | $387,096 | $86,000 | $131,000 | 11.1 | 2.0 | 22.6 | 5.0 | 17.5 |
| 9 | Charlotte, NC | $89,598 | $388,253 | $90,000 | $135,000 | 12.6 | 3.6 | 24.7 | 7.4 | 17.3 |
| 10 | Birmingham, AL | $78,171 | $256,704 | $63,000 | $101,000 | 12.9 | 5.6 | 31.8 | 14.5 | 17.3 |
Although the influence was lower and less accurately quantified than that of income and debt, loan-to-value differences also tracked in the predicted direction. This is significant since mortgage underwriting is a financial fitness test by definition. Monthly payment responsibilities are weighed against income by lenders. Wider denial gaps are more likely to occur when one group of applicants consistently enters that procedure with lower earnings and higher debt loads. Although these findings are descriptive, they imply that the disparity in mortgage denial rates between markets is strongly correlated with variations in applicants’ financial circumstances.
Black communities are probably still affected by discriminatory economic practices, such as redlining, which resulted in fewer job possibilities, lower earnings, and restricted credit availability. Additionally, experts suggest that the state of the local market remains important. The location of denial gaps is explained in part by home values. However, they serve more as a setting than a cause.
Households generally have less financial cushion in lower-value markets, and racial disparities in debt and income are typically more pronounced, making such disparities more significant during the underwriting phase. The barrier to purchasing is larger in high-cost regions, yet there seems to be less of a financial gap between Black and white mortgage applicants.
The way that policymakers and housing activists frame the issue also depends on this divide. Predatory lending in pricey metro areas is not the main cause of mortgage denial discrepancies. They also tell the tale of those who, even before a mortgage application is ever submitted, have managed to achieve financial security and those who have not.
To read more, click here.
