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U.S. Cities Where It’s Hardest (& Easiest) to Get a Mortgage

by Cristina Oprean
4 min. read

The number of denied mortgage applications in the U.S. is the lowest it’s been since the 2008 financial crisis, according to research from LendingTree. However, about 9.8% of loan applications across the country are denied, keeping homeownership just out of reach for about one in 10 borrowers.

As it turns out, one of the factors that could determine whether your mortgage application is approved is where you’re applying for the mortgage. For its report, LendingTree analyzed 2018 data from more than 10 million mortgage applications via the Home Mortgage Disclosure Act. This data pointed to 10 U.S. cities where borrowers were most likely to have their mortgage application denied.

Florida Cities Top the List

Several Florida cities are among the top 10, with Orlando, Miami, Jacksonville and Tampa all making the list.

Miami is the toughest place in the nation to secure a mortgage; it has the highest denial rate at 11.6%. The main reasons that applications were denied for Miami real estate include debt-to-income ratio (32% of denied applications) and collateral (22.7% of denied applications), as well as lower wages and risks associated with climate change.

Similarly, in Orlando – which has a 10.9% denial rate – the debt-to-income ratio was also a major factor in application denials at 36.5%. Credit history (18.8%) was another big factor, as well as prohibitively high home prices.

With a 9.5% denial rate, Tampa also saw debt-to-income ratio (33.1%) as a major factor in application denial, along with collateral (19.1%). Other factors include high home prices, as well as other high, related costs – such as local property taxes and mortgage expenses.

Tied with Tampa is Jacksonville, with an identical 9.5% denial rate. The main factors here include debt-to-income ratio as well as lack of affordable housing options.

Northeast Cities with High Denial Rates

Moreover, the debt-to-income ratio was also a major factor in application denials in both Detroit, MI, and New York City, NY.

Detroit – with its 9.4% denial rate – is still in the process of bouncing back from previous economic issues. Meanwhile, mortgage application denials for properties in New York can also be tied to the cost of real estate and closing costs in the city.

San Jose Represents the West

The only West Coast city to make the top 10 list is San Jose, CA, with an 8.7% denial rate that is mostly fueled by debt-to-income ratio. Although home values here have decreased by 9.7% in the past year, housing affordability and the cost of living in San Jose continue to contribute to the denial rate.

Southern States Round Out the List

In Birmingham, AL, credit history is a major factor in the 8.8% denial rate here, while in Houston, TX, the debt-to-income ratio mostly contributes to the city’s 8.7% denial rate. A lack of affordable housing in Houston can also be an issue.

Along the same lines, the debt-to-income ratio is also the main factor in the 8.4% mortgage application denial rate of mortgages for homes in San Antonio, another Texas city that made the list. A lack of housing inventory contributed to the denial rate here, as well.

Tips for Increasing Your Chances of Approval

As you can see, aside from location, major reasons why mortgage applications may be denied include:

  • Debt-to-income ratio
  • Your credit history
  • Lack of collateral
  • Unverifiable information
  • Incomplete applications

To maximize the chances of your application being approved, it’s important to review your credit before you apply. A bad credit rating can reflect poorly on you as a borrower and make it more difficult for you to be approved for a mortgage. To improve your credit score:

  • Stay under 20-25% of your available credit.
  • Request a credit line increase, if needed.
  • Leave credit card accounts open.
  • Keep only as much credit as you need.

Additionally, fill out all of your mortgage application paperwork completely, double-check the information you’ve included and ensure you’ve been as accurate as possible. Be prepared by having information like your income and amount of debt easily accessible in case you’re asked for proof of your financial history.

Furthermore, be realistic about the amount you’re looking for based on your income and current debt level. You’re more likely to be approved if the mortgage amount requested fits well within your current financial situation.

Finally – and this is something to consider – you’re more likely to be approved if you’re applying for a mortgage in the following cities:

  • Boston, MA
  • Kansas City, MO
  • Minneapolis, MN
  • Portland, OR
  • Raleigh, NC
  • Richmond, VA
  • Salt Lake City, UT
  • Louis, MO
  • Virginia Beach, VA
  • Washington, D.C.

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