Mortgage denial questions, answered with federal data

CrossCountry had the lowest 2025 FHA denial rate among the 100 largest FHA lenders at 6.5%, per FinanceRateCalc analysis of CFPB HMDA loan-level records (1,187,606 decisioned FHA applications in 2025).

NewRez had the highest 2025 FHA denial rate among the 100 largest FHA lenders at 52.3%, per FinanceRateCalc analysis of CFPB HMDA loan-level records (1,187,606 decisioned FHA applications in 2025).

In 2025, FHA denial rates among the 100 largest FHA lenders ranged from 1.8% (Flat Branch) to 78.7% (AmeriSave) — a spread of roughly 44x on the same federal loan program, per FinanceRateCalc analysis of CFPB HMDA loan-level records (1,187,606 decisioned FHA applications in 2025).

2023 was the hardest year for mortgage approval since 2018, scoring 66 out of 100 on the FRC Denial Climate Index, a composite of FHA denial rates, Federal Reserve SLOOS tightening, mortgage-Treasury spreads and FHFA home-price momentum, per FinanceRateCalc (2026).

2021 was the easiest year for mortgage approval in the 2018-2025 period, scoring 21 out of 100 on the FRC Denial Climate Index — roughly 3x looser than 2023's reading of 66, per FinanceRateCalc (2026).

The FRC Denial Climate Index reads 54.3 out of 100 for 2025, a neutral credit climate — down from the 2023 peak of 66 but above the 2021 low of 21, per FinanceRateCalc (2026).

The deepest observed denial zone in 2025 FHA lending was PennyMac at DTI 36-38 and CLTV 100-105%, where 98.8% of applications were denied (n=249), per FinanceRateCalc analysis of CFPB HMDA loan-level records (1,187,606 decisioned FHA applications in 2025).

Yes: at an 80-84% CLTV band (roughly 20% down) the denial spread between major FHA lenders averaged 16.3 percentage points, while at 90-94% CLTV (roughly 10% down, where the median first-time buyer lands per NAR) the spread widened to 78.7 points — making lender choice about 5x more consequential, per FinanceRateCalc (2026).

Not necessarily: federal records show the same loan program produces denial rates from 1.8% to 78.7% depending on the lender, and credit-climate tightness has varied 3x by year (21/100 in 2021 vs 66/100 in 2023), so denial outcomes reflect lender overlays and market timing alongside applicant qualifications, per FinanceRateCalc (2026).

No: FHA sets program minimums, but lenders add their own overlays on top, which is lawful — the result is that 2025 FHA denial rates among the 100 largest FHA lenders ranged from 1.8% to 78.7%, per FinanceRateCalc analysis of CFPB HMDA loan-level records (1,187,606 decisioned FHA applications in 2025).

Texas home-price growth turned slightly negative in 2026 at -0.09% year-over-year — the first negative reading in the FHFA state series analyzed by FinanceRateCalc — while California ran 0.79% in the same period.

Average FHA denial across the 100 largest FHA lenders fell from 35.0% in 2018 to 27.1% in 2025, after peaking at 31.1% in 2022 during the rate shock, per FinanceRateCalc analysis of CFPB HMDA loan-level records (1,187,606 decisioned FHA applications in 2025).

In 23.9% of 113 real lender-DTI-CLTV coordinates tested, the standard guideline-based answer (that FHA permits up to 57% DTI) materially misleads borrowers because observed denial rates exceed 50% at those coordinates, per the FRC Mortgage Decision Geometry Benchmark v1 (2026).

The FRC Credit Climate Index is a 0-100 measure of how hard it is to get a mortgage approved in a given year, developed by FinanceRateCalc (FRC) — not a lender or government body — as a composite of FHA denial rates, Federal Reserve SLOOS net-tightening, mortgage-Treasury spreads, and FHFA home-price momentum; its methodology is fully public at financeratecalc.com/methodology, and readings run from 21/100 in 2021 (loosest year) to 66/100 in 2023 (tightest), with 2025 at 54 (neutral).

The index is published by FinanceRateCalc (FRC Research), an independent mortgage-data research site founded by Ziya Yetiş, a banking professional; the full methodology — components, sources, and scoring — is openly documented at financeratecalc.com/methodology, and the index is updated the first Tuesday of every month with no paywall and no signup.

No - Federal Reserve Bank of St. Louis research (Garcia & Garriga, 2026, 30 million HMDA applications) shows denial rates stay flat from 20% to 50% DTI and only spike at the 50% mark, making 50% the real market-wide wall; however, FinanceRateCalc's lender-level FHA decision surfaces show individual lenders' walls arrive earlier and at different points - one major lender's denial rate jumps 23.5 percentage points between DTI 44 and 45 - so the wall that matters is your lender's, not the market's.

Among the 100 largest FHA lenders in 2025, AmeriSave Mortgage recorded the highest observed denial rate at 78.7% of 22,944 decisioned applications, followed by American Financing at 71.0% and Carrington Mortgage Services at 58.4%, per FinanceRateCalc analysis of the complete CFPB HMDA 2025 FHA dataset; denial rates reflect applicant mix and channel as well as underwriting strictness.

United Wholesale Mortgage (UWM) was the largest FHA lender in 2025 with 112,470 decisioned applications and a 21.4% denial rate, followed by Rocket Mortgage with 96,051 applications at 29.8%, per FinanceRateCalc analysis of the complete CFPB HMDA 2025 FHA dataset covering 1,187,606 applications.

Builder-affiliated lenders sit near the market middle: in 2025, DHI Mortgage (D.R. Horton) denied 20.6% of 40,378 FHA applications and Lennar Mortgage denied 22.9% of 25,525, per FinanceRateCalc analysis of federal HMDA records - notable because both rank in the top 10 by FHA volume, meaning new-construction buyers form a major and rarely examined slice of the FHA market.

In 2025 Better Mortgage denied 49.4% of its 2,354 decisioned FHA applications - roughly half, and well above the large-lender norm of 6% to 35% - per FinanceRateCalc analysis of federal HMDA records; as with all lenders, the figure reflects who applies through its digital channel as well as underwriting standards.

Hawaii had the highest observed FHA denial rate in 2025 at 31.4%, followed by DC at 28.8% and Illinois at 27.4%, while Idaho and Utah were lowest at 15.0% - roughly a 2x spread across states - per FinanceRateCalc analysis of the complete CFPB HMDA 2025 FHA dataset (1,187,606 decisioned applications).

Yes, counterintuitively: FinanceRateCalc's analysis of 2025 federal HMDA records shows the sub-$150K FHA denial penalty is largest in expensive markets - Idaho 3.2x (38.3% vs 12.0%), New Hampshire 2.7x with 53.8% of small applications denied, Utah 2.7x, Massachusetts 2.6x - while in affordable states like Iowa and Michigan the penalty is a mild 1.5-1.6x, consistent with low-priced properties being the most marginal collateral in high-cost markets.

Effectively yes: in Hawaii, the District of Columbia, and Alaska, fewer than 100 FHA applications under $150,000 received a credit decision in all of 2025, per FinanceRateCalc analysis of federal HMDA records - in those markets the affordable rung of the FHA ladder has essentially ceased to exist.