Ethno-racial and Down Payment Disparities in Mortgage Credit Access

Access to homeownership is central to both wealth and ethno-racial stratification. Previous research demonstrates ethno-racial inequality in homeownership such as unequal treatment, steering, and the type of mortgage products offered to both minorities and communities of color alike. However, it is unclear how differences in down payment levels shape ethno-racial disparities in mortgage credit access. This paper draws on annual data from the Home Mortgage Disclosure Act (HMDA) from 2018 to 2019 to assess ethno-racial disparities in mortgage outcomes across varying down payment levels. I demonstrate that black and Latino borrowers are more likely to obtain a high-cost loan and be denied a mortgage across varying down payment levels compared to white applicants. The results for Asians are mixed. These trends are particularly true when examining mortgage denials as black and Latino applicants with a down payment greater than 20% of the home value are just as likely to be denied a mortgage as white applicants with a down payment that is less than 5% of the home value. Asians with the highest down payment level perform similarly as whites with a below average down payment level. Implications for ethno-racial stratification are discussed.