Report: Asian Americans Disproportionately Denied Mortgages

An Asian woman holding a house miniature in one hand, with the other hand held up gesturing to the viewer to stop.

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Asian American mortgage applicants are facing higher mortgage denial rates than White mortgage applicants, despite having higher credit scores and incomes, according to a new Urban Institute report.

The denial rate for Asian American mortgage applicants is 8.7% compared to 6.7% of White mortgage applicants. The denial rates are higher for Asian American mortgage applicants across income levels, too.

Asian American mortgage applicants tend to have higher credit scores and incomes than their White counterparts. The median credit score for Asian American mortgage applicants was 761 in 2020 compared to 748 for White applicants. In 2019, the median income was $107,000 for Asian American applicants compared to $82,000 for White applicants.

A bar chart showing the rate of mortgage application denials among Asian Americans compared to whites across income levels

So why are Asian American mortgage applicants being denied at higher rates? Researchers suggest that, in 2019, about 37% of purchase loan applications from Asian borrowers were denied due to a high debt-to-income ratio compared to a 28.7% denial rate for White applicants.

However, even among Asian American applicants with DTI ratios below 30%, nearly 12% with annual incomes below $50,000 were still denied mortgages compared to 9.2% of White applicants in that same income bracket. That gap was found even for those earning more than $150,000 per year.

“This analysis highlights an important yet often overlooked barrier Asian applicants face in the housing market,” write researchers Linna Zhu, Jun Zhu, and Laurie Goodman with the Urban Institute. “More research is needed to understand why Asian homebuyers are denied mortgages more frequently than white borrowers, despite having, on average, higher credit scores and higher incomes. Failing to address this denial gap would keep more potential Asian homebuyers out of homeownership and widen the homeownership gap between Asian and white households.”