Same-Sex Couples Denied a Mortgage More Often

Homeownership is a hallmark of the American dream for many people. However, barriers such as a lack of sufficient income, struggles with bad credit, excessive debt, and wage stagnation prevent some Americans from achieving it.

Unfortunately, homeownership may be more of a hurdle for same-sex couples. According to a 2019 study by the Proceedings of the National Academy of Sciences, same-sex couples who apply for mortgages are denied a mortgage more frequently and often offered higher interest rates than heterosexual couples. 

Let’s take a closer look at how same-sex couples fare, and explore ways to make buying a home easier even if you’re facing discrimination.

Does the Fair Housing Act Apply?

The Fair Housing Act states that it’s illegal to discriminate against anyone seeking a mortgage or housing assistance on the basis of race, color, national origin, religion, sex, familial status, or disability. The Fair Housing Act doesn't specifically ban discrimination on the basis of sexual orientation or gender identity.

Former President Biden attempted to fix this shortfall via Executive Order 13988 when he took office on January 20, 2021. The order directed federal agencies to review policies responsible for non-discrimination and extend them to gender identity and sexual orientation. But four years later, current President Trump rescinded this push with Executive Order 14148. 

Executive actions don’t override the constitution, federal laws, or established legal precedents. But it’s still a disheartening development for those who believe in non-discrimination for all Americans. 

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What Is Lending Discrimination?

Under current federal laws, lending discrimination occurs when a lender makes an adverse action against an individual that's in a protected class, as outlined in the Equal Credit Opportunity Act (ECOA). This only addresses overt discrimination. 

“Disparate impact” discrimination is another kind of discrimination. This is where more subtle actions (or actions with no discriminatory intent) have a disproportionate effect on a protected group. According to the ECOA, lending discrimination based on the following is illegal:

• Age

• Sex

• Race

• Religion

• Color

• National origin

• Physical or mental handicaps

If you’re in a protected class and find yourself in any of these situations, you may be experiencing lending or housing discrimination. For example:

• A mortgage lender is unwilling to share current rates

• A lender quotes higher rates than those available to others in a similar financial situation

• A real estate agent states that they’re too busy to help you find a home

• A seller informs you that their home suddenly went off the market

• A lender mistreats you, or ignores you when you reach out to them for information or support

Lending and housing discrimination affects more of us than just the person or couple directly involved. Equality in lending opportunities can work to protect many different groups, bringing more people into the housing market and creating more stable and economically viable communities.

Steps to Take if You’re Facing Lending Discrimination

If you're part of a same-sex couple denied a mortgage based on credit discrimination, or facing unfair treatment for any other reason, here are steps you can consider taking to protect yourself.

• Document everything. Jot down or gather any evidence of interactions or exchanges you’ve had with the lender or individuals you suspect have discriminated against you. 

• Check the Attorney General’s Office or website for your state. Many states have their own equal credit opportunity laws. Find out from your state’s Attorney General if your lender violated any laws protecting LGBTQ+ citizens.

• File a complaint for a violation. In the event your case concerns a violation of the ECOA, visit the Consumer Financial Protection Bureau’s website  or call 855-411-2372 to file a complaint. If you suspect it involves a violation of the Fair Housing Act, you can visit HUD’s website and file a complaint online, or call their toll-free discrimination hotline at 800-669-9777.

By filing a complaint and standing up against lending discrimination, you can protect others from being discriminated against by the same lender or individual—as well as stand up for yourself. Protections for same-sex couples may be more limited now than for other groups who face discrimination, but this may not always be the case.

Make Yourself the Best Buyer You Can Be

Thankfully, you have additional ways to get yourself in the best shape possible to buy a home and avoid being denied a mortgage, even if you’re part of a same-sex couple. Here are a few important steps to take. 

Focus on improving your credit profile 

Your credit profile is a major factor that determines how much you’ll pay for a mortgage—and whether you can even be approved. If a home purchase is in your near future, pay down whatever existing debt you can, since your debt levels are a credit score factor. If you’re facing financial difficulties and need help getting your debt under control, consider your options for help, like debt relief programs. 

Get copies of your credit reports from AnnualCreditReport.com and check for errors (like accounts mistakenly reported as delinquent) that could be dragging your credit score down. 

Shop around

Talk to and apply for pre-approval with several mortgage lenders, because each offers different rates. You might also qualify for certain programs with a given lender that can result in saving money. The more lenders you explore, the lower your chances of being denied a mortgage by all of them. 

Save as much money as you can 

The more you can put down for a home purchase, the less you need to finance, and the less interest you pay overall. It’s a myth that you need a 20% down payment on a home, but save as much as you can for that down payment. Also factor in closing costs and leave yourself with an emergency fund. When something breaks, it’s on you as the homeowner to fix it.

Be choosy about where you look for homes

It’s a sad fact that LGBTQ+ Americans don’t receive the same level of welcome in every neighborhood in our country. So do your research to pinpoint parts of your city (or if you’re open to relocating, other cities) where you can afford the average home price and feel at home. If you have LGBTQ+ friends or family members, ask for their help (and if they’re homeowners, ask for real estate agent recommendations, too). 

Protect Your Finances and Future

Looking for more posts on how to ensure your financial rights are protected, how to manage your debt, and improve your personal and business finances during the pandemic and more normal times? Come back to our blog each week for more information.