These 12 Cities Have The Highest FHA Loan Denials For Minorities In The United States

FHA loan denials increased across the board after the housing crash. As a result, they remain higher than they were 20 years ago.

The proportion of FHA denial rates for white and black applicants has narrowed over the past 20 years. Yet, the difference between whites and Hispanics and whites grew. The disparity also grew between Whites and Asians. Zillow conducted a study of Home Mortgage Disclosure Act data.

The study also showed some disturbing trends.

In 1996, 8.5% of white applicants and 16.3% of black applicants were denied FHA loans. In 2016, 11% of white applicants and 18.6% of black applicants were denied.

Meanwhile, the FHA denial rate for Asian applicants in 2016 also rose. It was nearly 50%. It increased from 15.3%, up from 10.1% in 1996. In addition, Hispanic applicants also saw an increase. They saw an increase of over 40%. HMDA data shows Hispanics had an FHA denial rate of 10.5%. That number jumped to 14.8% in 2016.

Zillow Senior Economist Aaron Terrazas in a press release:

Mortgage approval data point to both progress and stubborn inequities in the American housing market. Black mortgage applicants are still more than twice as likely as whites to be denied. For the large majority of home buyers. These continued disparities represent an ongoing barrier to housing and social equity in America.

Black households making the median income could only afford 55% of the homes listed for sale in 2017. In addition, Asian households could afford 85.2%. Furthermore, white households could afford 74.2%.

The Top 12 Cities For FHA Loan Denials For Minorities

Below are the 12 housing markets with the largest combined denial rates for minority applicants. The data also includes anyone who considered a “protected class.”

The findings are based on a Zillow analysis of HMDA data for the 50 largest metro areas in the United States. Surprisingly, the majority of cities on the list with FHA loan denials like Detroit also have populations where minorities and people classified as a “protected class” make up a strong majority of the population. Five of the cities are also in southern states with three of them being in Florida. Four of the cities are also in rust belt states like Detroit and Pittsburgh. Black people also have super majorities in cities like Detroit and Milwaukee.

#12 Pittsburgh, PA Minority Denial Rate: 18.5%

#11 Richmond, VA, Minority Denial Rate: 18.6%

#10 New York, NY, Minority Denial Rate: 17.1%

#9 St. Louis, MO, Minority Denial Rate: 19.1%

#8 Chicago, IL, Minority Denial Rate: 19.4%

#7 Columbus, OH, Minority Denial Rate: 19.9%

#6 Milwaukee, WI, Minority Denial Rate: 20.2%

#5 Orlando, FL, Minority Denial Rate: 20.5%

#4 Tampa, FL, Minority Denial Rate: 21.3%

#3 Buffalo, NY, Minority Denial Rate: 22.4%

#2 Detroit, MI, Minority Denial Rate: 22.7%

#1 Jacksonville, FL, Minority Denial Rate:  24.9%