One in Roughly Seven Mortgage Applications Gets Denied
A Federal Reserve Bank of St. Louis working paper analyzing public Home Mortgage Disclosure Act (HMDA) data found lenders denied 15.1% of home purchase mortgage applications in 2024, 526,127 out of 3,491,513 completed applications, up from a cycle-low of 12.2% in 2021. The paper found denial rates move in sync with interest rates, largely through the debt-to-income channel, tighter rates squeeze how much loan a given income can qualify for, which pushes more applications over the denial line.
Denial rates also varied sharply by loan type. VA loans had the lowest denial rate of any category at 8.5% in 2024, reflecting both the program’s guarantee structure and the underwriting profile of the veterans and service members who use it.
Investor and Cash Buyers Clear Underwriting More Easily Than Owner-Occupants
Investment-property purchase applications were denied less often, 13.4% in 2024, than owner-occupied purchase applications at 15.3%, a gap the same working paper ties to underwriting fundamentals: investor and cash-adjacent buyers carried a lower median debt-to-income ratio, 37% versus 41% for owner-occupants, and put down materially more, a median 75% loan-to-value versus 91% for owner-occupant purchases.
That underwriting edge is the mechanical reason a cash or creative-finance offer clears faster and more reliably than a financed retail buyer’s offer, there is simply less that can go wrong between contract and closing. It is also part of why 61.1% of flipped homes in the first quarter of 2026 were purchased with all cash: the buyer pool wholesalers sell into is disproportionately the exact segment this data shows gets denied least. Bringing a seller a buyer who does not carry financing risk is a real, quantifiable advantage, not just a sales pitch, and it is the case VA Horizon’s trained callers are taught to make on the phone, with an in-house SDR confirming the seller is ready before that buyer ever gets introduced.
The Numbers
Lenders denied 15.1% of home purchase mortgage applications in 2024 (526,127 of 3,491,513 completed applications), up from a cycle-low of 12.2% in 2021.
VA loans had the lowest denial rate of any loan type in 2024 at 8.5%.
Investment-property purchase applications were denied 13.4% of the time in 2024, versus 15.3% for owner-occupied purchase applications, with investor buyers carrying a lower median DTI (37% vs 41%) and larger down payments (75% vs 91% CLTV).
61.1% of flipped homes in Q1 2026 were purchased with all cash, the buyer pool most wholesale deals are sold into.
Sources
The external data in this article draws on the sources below. Figures described in the text as estimates or industry triangulations are directional and are not attributed to a single dataset.
- Federal Reserve Bank of St. Louis Working Paper 2026-007, Garcia & Garriga, "The Determinants of Mortgage Denial Using Public Data"
- ATTOM, Q1 2026 Home Flipping Report