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Where Are Mortgages Denied the Most?

A new report by LendingTree revealed that Florida has four of the top cities with the highest mortgage denial rate. 

Miami came in at No. 1 with a denial rate of 11.6%, with the leading cause of rejection being homebuyers’ debt-to-income ratio, which was cited in 32.4% of failed loan applications. 

Orlando was a close second with a denial rate of 10.9%, followed by Tampa Bay with a denial rate of 9.5%. The leading cause of denial was the debt-to-income ratio at 36.5% and 33.1%, respectively. 

Additional markets on the list included: Detroit, Michigan; Birmingham, Alabama; Houston, Texas; San Jose, California; New York, New York, and San Antonio, Texas. 

As for markets that have the lowest rate of mortgage denial, borrowers in Minneapolis, Minnesota, were denied a mortgage just 4.6%. 

Borrowers in Salt Lake City, Utah, were denied a mortgage 4.9%, with 27.7% of them being denied because of their debt-to-income ratio. Kansas City, Missouri, reported a denial rate of 4.9%. 

Other markets with low denial rates were Virginia Beach, Virginia; Portland, Oregon; Washington, D.C.; St. Louis, Missouri; Boston, Massachusetts; Richmond, Virginia; and Raleigh, North Carolina. 

Overall, LendingTree reported that nearly 1 in 10 borrowers get denied for mortgages, and the national denial rate is 9.8%. 

“The low denial rate is encouraging, though some of this is because the financial profile of mortgage applicants has improved. The key for homebuyers is to be well-educated on the homebuying and mortgage process,” said LendingTree chief mortgage economist Tendayi Kapfidze, who led the study. “Understanding the key reasons mortgages are denied can help borrowers avoid missteps and compete effectively to secure their dream home.”

Mortgage denials for all applicants peaked at 18.7% in 2007. African-American borrowers had the highest denial rate at 17.4%. 

Non-Hispanic white borrowers had the lowest mortgage denial rate at 7.9%. 

Additionally, of the 50 markets studied by LendingTree, just three metros—Birmingham, Alabama; Louisville, Kentucky; and Memphis, Tennessee—did not have debt-to-income be the leading cause of mortgage denials. 

About Author: Mike Albanese

A graduate of the University of Alabama, Mike Albanese has worked for news publications since 2011 in Texas and Colorado. He has built a portfolio of more than 1,000 articles, covering city government, police and crime, business, sports, and is experienced in crafting engaging features and enterprise pieces. He spent time as the sports editor for the "Pilot Point Post-Signal," and has covered the DFW Metroplex for several years. He has also assisted with sports coverage and editing duties with the "Dallas Morning News" and "Denton Record-Chronicle" over the past several years.
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