15 US Cities With Highest Loan Approval Rates


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Editor’s note: This story originally appeared on Smartest Dollar.

Suppressed demand from the coronavirus pandemic, low interest rates, and a real estate shortage have created a booming housing market with near-record levels of refinancing activity. While the value of typical housing is up 15% from last year, the housing market is expected to remain hot in many cities through the end of the year and into next year. According to the latest loan-level mortgage data from Home Ac . Mortgage Disclosuret, 12.1 million mortgage applications were approved in 2020 with an overall approval rate of 83.6%.

Mortgage loan approval rates vary depending on the purpose of the loan. Applications to refinance traditional single-family loans without the option to withdraw cash recorded the highest approval rate of 86.9%. The approval rate for home purchase loans was nearly identical at 86.3%, and cash refinancing applications were less likely to be approved, with an approval rate of 84.9%. Compared to these types of loans, home improvement loans were the least likely to be approved — only 61% of home improvement loans were approved in 2020.

Mortgage application approval rates vary not only based on the purpose of the loan but also on the applicant’s demographics, including race and ethnicity. Participating applicants of different races (“common”) and non-whites had the highest loan approval rates, both at 86.1%. Blacks, American Indians or Alaska Natives, and applicants from two or more ethnic minorities saw the lowest approval rates, ranging from 65.8% to 69.4%. The loan approval rate for Hispanic or Hispanic applicants was 74.8% — a number higher than the rate for other minority groups, but still 11 percentage points lower than the approval rate for white borrowers.

Differences in loan approval rates are due in part to different credit profiles and application types across racial and ethnic groups. Members of minority groups are more likely to have lower incomes, lower credit scores and live in economically disadvantaged neighborhoods. However, research indicates that discrimination in the lending market persists, and even as differences in financial health are controlled for, minorities are being denied loans at higher rates than their white counterparts.

Large metros with the highest loan approval rates

A Millennial Couple Negotiating a Mortgage Offer
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Approval rates are highest in the Midwest, while they tend to be lower in the South and Southeast. This is likely due to differences in local demographic makeup and socioeconomic status. At 90.6% and 90.1%, respectively, North Dakota and South Dakota residents had the highest loan approval rates in the country. At the other end of the spectrum, Mississippi and Florida residents experienced the lowest loan approval rates, at 74.7% and 77.1%, respectively.

To find the sites with the highest loan approval rates, the researchers at Smartest Dollar analyzed the latest data from the Federal Financial Institutions Examination Board Mortgage Disclosure Act, the US Census Bureau, and Zillow. Researchers ranked Metro according to its mortgage loan approval rate. The researchers also calculated total approved loan applications, median home price, median household income, and minority share of the population — defined as the percentage of the non-Hispanic white population.

To improve relevance, urban areas with at least 100,000 people were included in the analysis.

Here are the large central areas (population 1 million or more) with the highest loan approval rates.

15. Phoenix Mesa Chandler, Arizona

Aerial view of Phoenix, Arizona
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  • Mortgage approval rate: 86.9%
  • Total approved loan applications: 299,785
  • Average house price: $367,484
  • Average family income: $67,896
  • Minority share of the population: 45.5%

14. Cary Raleigh, North Carolina

Raleigh, North Carolina's home
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  • Mortgage approval rate: 87.2%
  • Total approved loan applications: 81117
  • Average house price: $333,255
  • Average family income: $80,096
  • Minority share of the population: 39.3%

13. Milwaukee-Wakesha, Wisconsin

Milwaukee Homes
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  • Mortgage approval rate: 87.4%
  • Total approved loan applications: 78.032
  • Average house price: $237,009
  • Average family income: $65,845
  • Minority share of the population: 34.1%

12. San Jose – Sunnyvale – Santa Clara, California

San Jose homes
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  • Mortgage approval rate: 87.4%
  • Total approved loan applications: 106,692
  • Average house price: $1,384,778
  • Average family income: 130,865 dollars
  • Minority share of the population: 69.5%

11. Boston – Cambridge – Newton, MA – NH

Boston
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  • Mortgage approval rate: 87.4%
  • Total approved loan applications: 240213
  • Average house price: $573,182
  • Average family income: $94,430
  • Minority share of the population: 30.8%

10. Sacramento – Roseville – Folsom, California

House in Sacramento, California
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  • Mortgage approval rate: 87.6%
  • Total approved loan applications: 141.741
  • Average house price: $516,489
  • Average family income: $76,706
  • Minority share of the population: 48.7%

9. Denver Aurora Lakewood, Colorado

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  • Mortgage approval rate: 87.7%
  • Total approved loan applications: 226.051
  • Average house price: $529,969
  • Average family income: $85,641
  • Minority share of the population: 36.5%

8. Grand Rapids, Kentwood, Michigan

grand rapids michigan homes
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  • Mortgage approval rate: 87.8%
  • Total approved loan applications: 55,182
  • Average house price: $260,442
  • Average family income: $65,739
  • Minority share of the population: 22.1%

7. Indianapolis – Carmel – Anderson, Indiana

Winter scenery homes in Indianapolis, Indiana
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  • Mortgage approval rate: 87.8%
  • Total approved loan applications: 102323
  • Average house price: $216,944
  • Average family income: 62,502 dollars
  • Minority share of the population: 28.7%

6. Seattle Tacoma Bellevue, Washington

Seattle House neighborhood
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  • Mortgage approval rate: 87.8%
  • Total approved loan applications: 249869
  • Average house price: 632.585 dollars
  • Average family income: $94,027
  • Minority share of the population: 38.3%

5. Kansas City, Missouri, Kansas

Kansas City, Missouri homes
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  • Mortgage approval rate: 87.9%
  • Total approved loan applications: 91.428
  • Average house price: $244,048
  • Average family income: $70,215
  • Minority share of the population: 28.0%

4. Salt Lake City, Utah

Salt Lake City, Utah
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  • Mortgage approval rate: 88.0%
  • Total approved loan applications: 91,754
  • Average house price: $486,928
  • Average family income: $80,196
  • Minority share of the population: 29.2%

3. Portland – Vancouver – Hillsboro, OR – Washington

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  • Mortgage approval rate: 88.3%
  • Total approved loan applications: 150164
  • Average house price: $496,162
  • Average family income: $78,439
  • Minority share of the population: 27.7%

2. St. Louis, Missouri IL

Homes in St. Louis Missouri
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  • Mortgage approval rate: 88.4%
  • Total approved loan applications: 126136
  • Average house price: 209683 dollars
  • Average family income: $66,417
  • Minority share of the population: 26.6%

1. Minneapolis St.. Paul Bloomington, Minnesota, Wisconsin

Minneapolis, Minnesota Residential District
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  • Mortgage approval rate: 89.3%
  • Total approved loan applications: 208558
  • Average house price: $337,255
  • Average family income: $83,698
  • Minority share of the population: 25.4%

Detailed and methodological results

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The large metro areas with the highest loan approval rates are mostly located in the Midwest and West and their approval rates range from 86.9% to 89.3%. While median home prices vary widely across large metro areas with the highest approval rates — from under $210,000 to nearly $1.4 million — median household incomes sway above the national average of 66 one thousand dollars. With the exception of Phoenix, San Jose, and Sacramento, the percentages of minority populations are below the national level of 40%.

Small and medium-sized central areas with the highest loan approval rates are also mostly spread across the Midwest and West. The loan approval rates in these cities are as high as 94%. Average home prices and median household incomes in some of these central areas are below the national level; However, all of these central regions have below-average minorities.

To find the sites with the highest loan approval rates, researchers at Smartest Dollar analyzed the latest data from the Federal Financial Institutions Examination Board’s Mortgage Disclosure Act, the US Census Bureau’s 2019 American Community Survey, and Zillow’s Zillow Home Value Index. Researchers ranked Metro according to its mortgage loan approval rate. In the event of a tie, the metro with the most foreclosure approvals ranked higher. The researchers also calculated median home price, median household income, and minority share of the population — defined as the percentage of the population that is not white, non-Hispanic.

Only traditional single-family mortgage applications were considered in the analysis. When calculating approval rates, withdrawn and incomplete applications as well as purchased loans were excluded.

To improve relevance, urban areas with at least 100,000 people were included in the analysis. In addition, the central regions were grouped into the following groups based on population size:

  • Small central areas: 100,000–349,999
  • Medium-sized central areas: 350,000-999,999
  • Large metro: 1,000,000 or more

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