Rate of Mortgage Approvals: How Our State Compares
Millions of Americans look to mortgage loans to help them buy homes, but the number of applications — and the percentage actually getting approved and funded — varies by where you live.
To determine the states with the most mortgage purchase, not refinancing, loan applications and approvals, NerdWallet analyzed 2015 data from the Home Mortgage Disclosure Act database for each state. The HMDA requires that financial institutions report mortgage transactions to the federal government.
To create a comparison across states, we counted the rate of applications and the observed approval rate for purchases per 1,000 residents. For the definition of “observed approval rate,” see the methodology at the end of this article.
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The average mortgage approval rate nationwide was 88.2%. Minnesota was home to the highest percentage of mortgage purchase loan applications approved in 2015, with a rate of 92.3% — meaning fewer than 8% of applications were denied there. Alaska was second at 91.8%.
The state with the lowest percentage of approved mortgage applications was Florida, at 82.9%.
You can find the rate of mortgage approvals for your state in the chart below.
Colorado saw the most mortgage purchase loan applications per capita in 2015, with 18.2 residents per 1,000 trying to get a loan, the analysis found. In second place was Utah, with 17 applications per 1,000 people.
The state with the fewest applications was New York, where only 6 people out of every 1,000 applied for a mortgage.
See the chart below for the number of mortgage loan applications and originations — meaning ones that are approved and funded — per 1,000 people in each state.
Using data from the 2015 Home Mortgage Disclosure Act database, we looked at mortgages for first-lien and owner-occupied one- to four-family homes, such as town houses. Mobile and manufactured homes weren’t included in the data set we examined.
Approval rates were determined by taking the total number of mortgage applications and dividing it by the number of applications that were approved — this is known as the “observed approval rate.” However, the observed rate doesn’t take into account changes in credit availability over time, which has an impact on the number of applications. The Urban Institute, a think tank that analyzes social and economic policies, has attempted to address this problem “by calculating the denial rate for applicants with less than ‘near perfect’ credit” to create what it calls the “real rate.” See the rationale and methodology here.