"Getting an offer accepted on a home - a monumental task in some markets - is only one of the initial steps in the homebuying process. For many buyers, the success of their homebuying efforts hinges on the ability to secure financing, and thousands of mortgage applications are denied each year. Though the share of homes bought with cash is at historic highs, according to the National Association of Realtors, the overwhelming majority of home purchases are made with a mortgage."
"In the past several years, high home prices and mortgage rates have impacted the sale of homes and thus the demand for home loans; overall, mortgage applications for single-family, nonmanufactured homes have fallen 33% from their 2021 peak, according to my analysis of 2024 data filed by lenders under the Home Mortgage Disclosure Act. During this same period, the share of mortgages denied for high debt-to-income ratio and insufficient collateral, both related to high prices, have risen."
Getting an offer accepted is only the first step; financing often determines final homepurchase success and thousands of mortgage applications are denied each year. Although cash purchases are at historic highs, most buyers use mortgages. Mortgage applications for single-family, nonmanufactured homes fell 33% from the 2021 peak. Denials for high debt-to-income ratios and insufficient collateral have increased. The average home loan amount rose 4% in 2024 to about $376,200. From 2019 to 2024, originations represented roughly 70%–73% of applications. Buyers can reduce denial risk by increasing down payments and avoiding overvalued listings.
Read at SFGATE
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