Home purchase mortgage originations to Black borrowers jumped 30 percent between 2019 and 2021, but then plummeted 40.5 percent between 2021 and 2025—the steepest decline among all major racial and ethnic groups—according to new analysis of 2025 Home Mortgage Disclosure Act data published by the Urban Institute on June 25, 2026. The report reveals that while racial homeownership gaps are narrowing as households of color enter homeownership at faster rates than white households, rising mortgage rates and home prices have disproportionately locked out low-income families and borrowers of color from the housing market.

Overall home purchase mortgage originations climbed 18.1 percent from 3.6 million to 4.3 million loans between 2019 and 2021, then crashed to 2.8 million loans in 2025—35 percent below the 2021 peak. Hispanic borrowers saw originations rise 27.5 percent between 2019 and 2021, then drop 23.6 percent through 2025, a smaller decline than other groups. White and Asian borrowers both experienced roughly 36 percent declines in mortgage originations between 2021 and 2025. Mortgage denial rates climbed across the board after 2021, with Black borrowers facing the highest denial rate at 18.2 percent in 2025, compared to 6.9 percent for white borrowers in both 2021 and 2025. The share of homebuyers putting down at least 20 percent jumped from 24.2 percent in 2020 to above 30 percent since 2022, with white and Asian homebuyers most likely to make large down payments. Between 2019 and 2022, real median income for recent homebuyers increased 12 to 16 percent across all racial and ethnic groups, while real average income rose 28 to 31 percent.

The report finds that debt-to-income ratios became the most common reason for mortgage denial as interest rates climbed, with approximately 43 percent of denied home purchase applications in 2025 citing excessive DTI ratios. Authors Jung Hyun Choi, Aniket Mehrotra, and John Walsh write that DTI-related denials were more prevalent among borrowers of color than among white borrowers. The report concludes that recent homebuyers "increasingly represent households with stronger financial resources, higher earnings, and greater accumulated wealth, reflecting the growing financial barriers to homeownership in an environment of rising home prices and mortgage rates." The data suggest that had financing conditions remained more favorable, homeownership gains among households of color "may have been even larger."

The Urban Institute explains that the narrowing homeownership gap isn't because barriers have disappeared—it's partly because most white households already own homes and partly because younger, increasingly diverse generations are boosting the share of first-time homebuyers who are households of color. The combination of lower mortgage volumes and higher denial rates shows that elevated interest rates and affordability pressures have hit prospective homebuyers of color especially hard. To offset higher monthly payments, buyers have leaned on larger down payments, but white and Asian homebuyers are more likely to receive financial support from family, giving them an advantage. The report warns that recent federal policy changes may complicate access further: earlier this year, the Federal Housing Finance Agency lowered affordable housing goals for Fannie Mae and Freddie Mac and eliminated targets tied to majority-minority neighborhoods, potentially reducing incentives to serve underserved borrowers.

The report calls for a comprehensive approach, urging government-sponsored enterprises and the Federal Housing Administration to support sustainable mortgage access by incorporating on-time rental payments in underwriting, streamlining down payment options including zero-down programs, and improving loss mitigation. The authors emphasize that expanding homeownership requires increasing the supply of starter homes affordable to first-time buyers, noting that Congress just passed the 21st Century ROAD to Housing Act with reforms to boost housing production. But they also flag a research gap: today's affordability challenges may be causing people to double up with family or delay forming independent households altogether, meaning homeownership rate data calculated at the household level may not capture persistent barriers to housing access. The bottom line: meaningful progress in closing racial homeownership gaps is possible even when prices and rates surge, but only if policymakers prioritize affordability and don't weaken the systems designed to help underserved buyers.