Where you apply matters: FHA denial rates in 2025 ran from 29.0% in Hawaii to 14.8% in Idaho and Utah — roughly a 2× spread. But the sharper finding is inside each state: the small-loan penalty is worst where homes are most expensive. In Idaho, a sub-$150K FHA application was denied 3.2× as often as a $250K+ one. In New Hampshire, 53.8% of small FHA applications were denied — more than half. Source: the complete 2025 CFPB HMDA FHA dataset, 1,217,297 decisioned applications.
In affordable states (Iowa, Michigan, Illinois), a $120K loan buys an ordinary house, and the small-loan penalty is mild (~1.5×). In expensive states, a sub-$150K property is the market’s most marginal stock — aging, unusual, or failing FHA property standards at appraisal — and the penalty explodes: Idaho 3.2×, New Hampshire 2.7×, Utah 2.7×, Maine 2.7×, Oregon 2.6×, Massachusetts 2.6×. This is consistent with the national pattern we documented in the small-loan penalty, where collateral is a leading killer of small applications.
And in three markets — Hawaii, DC, and Alaska — fewer than 100 sub-$150K FHA applications received a decision all year. The affordable rung of the ladder hasn’t just gotten harder there. It has effectively vanished.
Sorted by overall denial rate. “Small” = loans under $150K; “large” = $250K+; penalty = small ÷ large. Cells need 100+ decisioned applications; — means the market is too thin to measure.
| State | FHA apps (2025) | Denial rate | Small-loan denial | Large-loan denial | Penalty |
|---|---|---|---|---|---|
| Hawaii | 1,367 | 29.0% | — | 26.9% | — |
| District of Columbia | 761 | 28.8% | — | 24.9% | — |
| Illinois | 34,402 | 27.4% | 34.5% | 23.5% | 1.47× |
| Michigan | 33,501 | 27.2% | 35.2% | 21.9% | 1.61× |
| Vermont | 1,048 | 26.9% | 41.9% | 21.6% | 1.94× |
| Wisconsin | 12,288 | 26.3% | 43.8% | 19.8% | 2.21× |
| Connecticut | 9,718 | 26.2% | 46.8% | 22.9% | 2.04× |
| Pennsylvania | 37,051 | 25.3% | 37.5% | 19.6% | 1.91× |
| Iowa | 8,262 | 24.9% | 33.2% | 20.4% | 1.63× |
| New York | 22,032 | 24.9% | 34.2% | 23.3% | 1.47× |
| Mississippi | 13,439 | 24.8% | 41.7% | 16.3% | 2.56× |
| Delaware | 5,390 | 24.8% | 45.9% | 22.3% | 2.06× |
| Georgia | 63,095 | 24.6% | 42.8% | 20.8% | 2.06× |
| Louisiana | 19,470 | 24.5% | 38.3% | 17.4% | 2.2× |
| New Jersey | 25,487 | 24.5% | 44.0% | 22.5% | 1.96× |
| Florida | 120,403 | 24.3% | 43.6% | 22.2% | 1.96× |
| Maryland | 25,535 | 24.1% | 43.1% | 21.7% | 1.99× |
| Maine | 4,617 | 23.8% | 48.9% | 18.3% | 2.67× |
| West Virginia | 6,908 | 23.6% | 33.7% | 15.7% | 2.15× |
| New Hampshire | 3,561 | 23.2% | 53.8% | 19.6% | 2.74× |
| Ohio | 46,920 | 22.9% | 32.2% | 18.6% | 1.73× |
| Alabama | 27,960 | 22.8% | 38.6% | 16.7% | 2.31× |
| Kansas | 9,144 | 22.6% | 33.0% | 16.2% | 2.04× |
| Indiana | 34,820 | 22.4% | 32.6% | 17.7% | 1.84× |
| Massachusetts | 13,220 | 22.3% | 52.8% | 20.3% | 2.6× |
| New Mexico | 9,411 | 22.0% | 42.0% | 17.4% | 2.41× |
| Minnesota | 13,644 | 21.9% | 36.2% | 18.5% | 1.96× |
| North Carolina | 47,347 | 21.6% | 38.8% | 17.5% | 2.22× |
| Virginia | 31,545 | 21.6% | 37.9% | 18.8% | 2.02× |
| Rhode Island | 3,829 | 21.5% | 45.9% | 19.3% | 2.38× |
| Kentucky | 19,268 | 21.3% | 33.4% | 15.5% | 2.15× |
| Montana | 3,227 | 21.2% | 43.3% | 16.8% | 2.58× |
| South Carolina | 32,938 | 21.0% | 37.6% | 17.8% | 2.11× |
| Arkansas | 13,935 | 21.0% | 33.1% | 14.6% | 2.27× |
| California | 83,299 | 21.0% | 44.7% | 19.8% | 2.26× |
| Colorado | 24,907 | 21.0% | 37.6% | 19.7% | 1.91× |
| South Dakota | 2,857 | 20.8% | 39.9% | 15.0% | 2.66× |
| Nebraska | 6,127 | 20.5% | 36.6% | 14.9% | 2.46× |
| Tennessee | 36,601 | 20.3% | 37.1% | 15.8% | 2.35× |
| Missouri | 25,386 | 20.1% | 32.2% | 14.4% | 2.24× |
| Oklahoma | 18,580 | 20.0% | 34.3% | 14.9% | 2.3× |
| Arizona | 40,618 | 18.4% | 37.5% | 16.1% | 2.33× |
| Alaska | 1,945 | 18.3% | — | 15.2% | — |
| Washington | 21,479 | 18.1% | 40.9% | 16.3% | 2.51× |
| North Dakota | 2,080 | 17.7% | 34.4% | 13.5% | 2.55× |
| Oregon | 13,246 | 17.7% | 41.1% | 15.6% | 2.63× |
| Puerto Rico | 7,849 | 17.7% | 18.6% | 15.6% | 1.19× |
| Wyoming | 2,975 | 17.5% | 34.4% | 13.9% | 2.47× |
| Nevada | 15,793 | 17.3% | 36.0% | 15.5% | 2.32× |
| Texas | 131,577 | 15.7% | 25.5% | 14.9% | 1.71× |
| Utah | 15,505 | 14.8% | 37.5% | 13.8% | 2.72× |
| Idaho | 8,661 | 14.8% | 38.3% | 12.0% | 3.19× |
Go deeper: which lender is the soft door in your state → · why each lender says no →
State rates reflect the mix of lenders, property stock, and applicants in each market — not a ranking of “strict” or “lenient” states, and not a finding about any lender or regulator. The penalty pattern is an observation consistent with collateral and small-balance economics; we report what the federal record shows. Lender-level behavior: the top-100 table · where each wall sits.
“In New Hampshire, 53.8% of small FHA applications were denied in 2025, according to FinanceRateCalc.”