FHA loans exist to widen access — lower down payments, more flexible credit standards. But across the 100 largest FHA lenders, switching a file from Conventional to FHA almost always raises the denial rate. The question worth asking isn't whether that gap exists. It's how big it is at your lender.
Using 2025 HMDA loan-level data, FRC cross-tabulated each of the the 100 largest lenders we track by loan type — Conventional, FHA, and VA — to isolate the actual denial rate for each. The pattern: 10 of the 100 largest lenders deny FHA applications at a higher rate than Conventional applications from the same institution. Only Planet Home runs the opposite direction.
| Lender | Conventional | FHA | VA | FHA−Conv gap |
|---|
Almost lost in the FHA story: VA loans post the lowest denial rate of all three loan types at nearly every lender — often by a wide margin. At CrossCountry, VA denial sits at 3.0% against 6.37% for FHA. At UWM, it's 9.12% against 21.58%. VA's stronger underwriting position (no down payment requirement working against, rather than for, approval odds; VA's own underwriting flexibility) shows up clearly in the lender data, even though it gets a fraction of the attention FHA gets in consumer content.
The honest answer: HMDA's loan-level data shows the outcome, not the underwriting logic behind it. A few patterns are visible in the numbers themselves. Lenders with the smallest FHA-Conventional gaps (CrossCountry, Freedom, Guild — all under 3pp) tend to run high FHA volume relative to their total book, suggesting FHA underwriting that's built into their core process rather than treated as a separate, higher-friction track. Lenders with the largest gaps (Wells Fargo, Rocket, loanDepot) run comparatively low FHA share of total volume — Wells Fargo's FHA book is under 5% of its total applications, the smallest of any lender we track.
That's a correlation, not a confirmed mechanism — we can't see inside any lender's underwriting engine. But it's consistent with a simple explanation: lenders built around high FHA volume have streamlined that process; lenders where FHA is a small share of the book may apply more manual scrutiny, more overlays, or simply have less institutional practice with FHA's specific documentation requirements.
This compares aggregate denial rates by loan type at each lender — it does not control for borrower credit profile, DTI, down payment, or property type within each loan type bucket. FHA borrowers as a population may carry different average risk characteristics than Conventional borrowers at the same lender, which could explain part of the gap. What this data does show clearly: the size of that gap is wildly inconsistent across lenders serving the same federal loan programs — which on its own is worth knowing before you pick a lender for an FHA file.
_data/loan_type_denial_2025.json. Statistical research on aggregate lender behavior — not financial advice or an approval prediction for any individual file.
This data is free to cite with attribution to FinanceRateCalc.com. Questions or a quote for your story — reach out at [email protected].
Prices and rates are widely reported. Whether a lender says yes is not. In the complete 2025 federal record, denial rates across the 100 largest FHA lenders ran from 1.8% to 78.7% — same programme, same year.
And it is not simply who applies where: standardizing on state, loan amount, income, debt-to-income and loan-to-value, applicant mix explains only a 2.7× range in expected outcomes.
CFPB HMDA 2025, computed by FinanceRateCalc. Covers the highest-volume lenders published per market, not all lenders. Historical observations, not predictions. CC BY 4.0, not independently reproduced.