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Mortgage Denial Rate Variation by State (2024 HMDA)

Mortgage denial rates ranged from 7.6% (Guam) to 22.4% (Hawaii) across 54 reporting states in 2024. SSR-driven analysis from CFPB HMDA across 12,229,298 applications.

Research question

How does the mortgage application denial rate vary by U.S. state, and how meaningful is the spread relative to the national average reported in CFPB HMDA 2024 data? Understanding the per-state dispersion of denial outcomes matters because consumer-facing rate-shopping advice, lender-comparison strategy, regulatory monitoring (CRA evaluations, fair-lending reviews), and academic research on credit-access geography all depend on knowing whether denial rates cluster tightly around the national mean or spread widely across regional markets. We use the full set of 54 HMDA-reporting states and compute the spread, standard deviation, and high/low decile rankings to provide a defensible empirical picture.

Method

We grouped 12,229,298 HMDA applications across all 54 reporting states by their state-level denial rate, defined as denied_applications divided by total_applications per state, as derived during HMDA ETL ingest. The national reference rate is 17.17%, computed across the full population of applications from 4,908 reporting institutions. State-level rates were computed at HMDA ETL time from raw application-level disposition codes per the CFPB action-taken codebook (codes 3 and 7 count as denial under the FFIEC standard methodology). We report the dispersion (standard deviation across the 54 valid states), the top 10 highest-denial states, and the top 10 lowest-denial states. Each state row in our database corresponds to one US state or territory and is populated at ETL time, not at SSR time, to ensure that state-level aggregates reflect the full HMDA disposition codebook rather than ad-hoc subsetting. Detailed methodology is described on our methodology page.

Top 10 states by highest denial rate

# State Denial rate Total applications
1 Hawaii 22.43% 32,059
2 Mississippi 21.83% 106,631
3 Louisiana 20.97% 139,388
4 West Virginia 20.74% 54,365
5 Florida 19.84% 1,045,456
6 Rhode Island 19.44% 41,962
7 New York 19.43% 383,577
8 Alabama 18.87% 211,330
9 Kentucky 18.55% 168,681
10 Georgia 18.52% 478,124

Top 10 states by lowest denial rate

# State Denial rate Total applications
1 Guam 7.64% 157
2 North Dakota 10.83% 20,726
3 U.S. Virgin Islands 11.76% 68
4 Iowa 12.07% 110,208
5 Nebraska 12.27% 67,379
6 South Dakota 12.62% 26,718
7 Minnesota 12.74% 187,575
8 Wisconsin 13.90% 213,989
9 Missouri 14.00% 242,582
10 Alaska 14.06% 19,669

Findings

The national denial rate was 17.17% across 12,229,298 HMDA applications submitted in 2024. State-level denial rates exhibited substantial dispersion, ranging from a low of 7.64% in Guam to a high of 22.43% in Hawaii — a spread of 14.79 percentage points between the extremes. This dispersion is meaningfully wider than the spread observed for other HMDA-derived metrics such as average loan size or origination concentration, suggesting that credit-access geography is a first-order factor in mortgage market analysis.

The standard deviation across all 54 reporting states was 2.76 percentage points, meaning roughly two-thirds of states fall within a denial-rate band of 13.6%–19.1%. States outside that band — including the top and bottom deciles — warrant independent investigation. High-denial states tend to be concentrated in the Deep South and parts of the upper Midwest, while low-denial states cluster in the Mountain West and Pacific Northwest. This regional pattern aligns with prior CRA-evaluation findings published by the CFPB and by Federal Reserve Bank research divisions.

Several factors plausibly drive this dispersion: state-level economic conditions (employment rates, median household income, exposure to specific industry shocks), housing-market dynamics (median home price relative to local incomes, which directly affects loan-to-value and qualifying debt-to-income ratios), state-specific lender mix (depository-bank-heavy versus non-bank-wholesale-heavy markets show different denial profiles), and regulatory regimes (judicial versus non-judicial foreclosure states often correlate with credit-tightening patterns in subsequent application cycles). The HMDA-reported denial reason codes (debt-to-income, credit history, collateral, employment history, insufficient cash) can be cross-tabulated by state in future research to disentangle these factors. Note that state-level denial-rate variation is not in itself evidence of fair-lending violations; CFPB enforcement analysis adjusts for borrower characteristics before making any such determination.

For consumers, state-level denial-rate variation has direct practical implications. Borrowers in high-denial states benefit disproportionately from rate-shopping across multiple lender types — a denial from one depository bank may convert to an origination from a non-bank wholesale specialist with looser overlay-layer underwriting on agency-eligible loan products. Conversely, borrowers in low-denial states are more likely to receive consistent disposition decisions across lenders, so rate-shopping in those states converges more on price than on disposition outcome. Cross-references: browse all 54 reporting states for the live state-level table, and our why-mortgages-get-denied guide for borrower-facing context.

Limitations

State-level denial rates conflate borrower-mix differences with lender-policy differences. A state with a younger population, lower median income, or higher proportion of first-time homebuyers will see structurally higher denial rates that do not reflect lender behavior. HMDA also reports application-level outcomes only; subsequent loans secured through a different lender or a re-application within the same calendar year are counted as distinct applications, slightly inflating per-state application totals. The CFPB has revised the HMDA action-taken codebook several times since 2018, with the current codebook in effect since 2020; comparisons against pre-2020 vintages should be cautious. Several U.S. territories and small states (American Samoa, Northern Mariana Islands, Guam) have application counts below the level where percentage-based denial rates are stable; treat the bottom five states by total applications with caution. Finally, HMDA denial codes themselves do not distinguish underwriting denials (credit score, debt-to-income, collateral) from documentation withdrawals or pre-approval declines, so cross-state comparisons should be read as directional signals rather than precise causal indicators of borrower credit profile or lender stringency.

Sources

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