Racial gap in home mortgage lending, here’s what you need to know


Have you ever walked into a room and within minutes find yourself wishing you hadn’t brought a knife to a gunfight or pen to a test. Trying to secure a mortgage can have that effect on you if you don’t take the time to understand the path ahead (and behind). There are racial disparities in mortgage lending. The fact that fewer than half of Black families own their home compared to nearly three-fourths of White families isn’t because black people don’t want to buy homes. 

What challenges exist for potential black homebuyers?

Racial inequities have existed in home buying since the beginning. Redlining was made legal by the National Housing Act of 1934, which established the Federal Housing Administration (FHA). Investopedia defines redlining as an unethical practice that puts services (financial and otherwise) out of reach for residents of certain areas based on race or ethnicity. It can be seen in the systematic denial of mortgages, insurance, loans, and other financial services based on location rather than an individual’s qualifications and creditworthiness. Notably, the policy of redlining is felt the most by residents of minority neighborhoods.


Although the 1968 Fair Housing Act prohibited this practice, discrimination still persists. Since the 1968 Act, the gap between Black and White homeowners continues to widen. 

To this day Black people shopping for a mortgage receive higher interest rates, experience more denials, and are shown less options when shopping for a home – perpetuating segregation of neighborhoods

How do these barriers affect black homebuyers? 

According to a 2019 article in the Washington Post, “In 2017, 19.3 percent of black applicants were denied a conventional home loan, compared with 7.9 percent for whites, according to the federal Consumer Financial Protection Bureau. The refinancing market saw similar differentials with blacks rejected on 39 percent of their applications and whites on 22.9 percent.” 


Being met with these challenges not only widens the racial gap in homeownership but also the wealth gap. According to a 2020 report by the Joint Economic Committee, “The median wealth of Black families ($17,000)—is less than one-tenth that of White families ($171,000).” Homeownership is not the only way to build wealth but it can help and the challenges Black Americans face in home buying is a contributor to widening the gap. 

Photo of a four bedroom home

What can I do to be prepared for the home buying process? 

Black homebuyers shouldn’t allow this to deter or discourage them from buying a home. Knowing the state of things is the first step to navigating the process and having success. Here are a few more steps you can take to prepare for what you’ll encounter.


Do your research. Take time to understand mortgages, the home buying process, and what your needs and desires are.


Know the state of your finances. Be clear about what you can afford, your credit score, and what’s in your credit profile.


Build a habit of budgeting and saving. Whether buying a home or not, budgeting is essential for healthy finances. But as you approach home buying, you’ll want to take your budget seriously and save to have money on hand for a down payment and other potential costs.


Get help from professionals. There’s a lot to know about the home buying process and digesting so much information can be overwhelming, so seek counsel from professionals. Navicore Solutions, a MoCaFi partner, offers pre-purchase counseling. 


Use the MoCaFi app to build your Mobility Score and gain access to services offered by Navicore. Download the MoCaFi app and enroll in a MoCaFi Mobility Bank Account to get started.