Young single women are buying houses at a rate higher than ever before, but they’re also facing a serious barrier: They have much higher denial rates for mortgages than men.
According to research from LendingTree, “sole” women now account for 21.9% of potential homebuyers as of 2024. However, systemic barriers are keeping a number of women from catching up to the data for single men.
Single female applicants are 29.8% more likely to be denied a mortgage vs. men in the same position. Many of the largest gender disparities are seen in the South, with Louisiana, Mississippi and Alabama topping the divide in denial rates.
“It’s not because some mustache-twirling loan officer is sitting there going, ‘A woman? Absolutely not!’ finance expert Michael Ryan said in an interview with Newsweek about the report.
“It’s actually more insidious than that. The system itself is doing the dirty work.”
So what can women — or anyone — do to ensure they don’t end up as a statistic when buying a home?
You probably already know that the first step for applying for a mortgage is to get preapproved. This gives you a good ballpark figure for how much you can afford, and lets homebuyers know you’re serious about making an offer.
However, a preapproval does not guarantee you’ll get a mortgage, or get the same amount and rate you were quoted, so it’s important to work closely with your mortgage officer or loan broker to understand the terms of your preapproval and how the actual loan may vary from the quote.
When you apply for your official mortgage, the lender will assess your credit history, employment record, your income and debts, and any assets you have, in addition to a review of the property you want to buy.
From there, the underwriting process ensures all checks and balances are in place, and an underwriter will make the final decision on your loan. The most important factor in this process is often your debt-to-income (DTI) ratio, and ensuring you do not currently have a number of debts — or that the mortgage will not be too burdensome for you to bear.
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Your DTI helps lenders assess their risk in granting you a mortgage, and is an assessment of how likely you are to default on your loan. In most cases, you’ll need a DTI ratio of 43% or less to get approved for a mortgage. (3) If your ratio is higher, paying down existing debt will lower it.
To calculate your DTI ratio, you would add up your monthly debt payments (car, student loans, credit card, etc.), divide that by your gross (pretax) monthly income and multiply by 100.
If a lender rejects your application, you’ll receive a mortgage denial letter outlining why you were refused and which credit reporting agency supplied the credit report used to evaluate your application. However, you should already know that your application was likely to be rejected by consulting with your loan officer.
The most likely culprit is your credit score, so here are some ways you can improve it fast:
Look for inaccuracies on your credit report.
Avoid opening new accounts.
Pay all your bills on time, and pay down your debt as much as possible.
Have a relative with good credit add you to their accounts so that their history boosts your own.
A rejected mortgage application isn’t final. You may be able to correct the issues with your finances and reapply down the line, or you may qualify for government-backed home loans in the more immediate future. (4)
The LendingTree report showed that, in 2024, single women originated $173.3 billion in mortgage debt, while single men originated $328.7 billion. The gender income gap is partly to blame for this huge disparity, but it is a lesson for anyone looking to get approved for a mortgage: Your income matters.
“Women tend to have smaller incomes than men, and that can create homebuying challenges,” LendingTree chief consumer finance analyst Matt Schulz said.
“Of course, when it comes to men being more likely than women to buy a home, there are other factors as well, including sexism, but it’s hard to overstate how important income is to the homebuying process.”
If you’re looking to buy a home, finding ways to increase or supplement your income is critical.
In 2024, lenders denied almost 20% of home loan applications, according to Home Mortgage Disclosure Act data, so being approved for a mortgage is not always an easy process
“A lot of this comes down to debt-to-income ratios and credit history length. Men, on average, still earn more than women and often have longer credit files,” Kevin Thompson, founder and CEO of 9i Capital Group, told Newsweek. (2)
“That matters when lenders are sizing up risk. The size of the loan can play a role, too. Smaller loans sometimes get flagged as less creditworthy, even if that doesn’t tell the full story.”
When you’re considering your mortgage options, don’t limit yourself to a specific type of lender. Applying at multiple banks, credit unions or online lenders can help improve your odds of getting approved at a good rate. Young buyers can also lean on their parents’ for financial support, or even for their good credit histories by cosigning the loan.
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LendingTree (1); Newsweek (2); Fidelity (3); USA.gov (4)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
