Black homeownership gap highlighted in push
A national real estate advocacy group is calling on the Federal Housing Administration (FHA) to scrap a mortgage underwriting rule it says unfairly burdens married homebuyers, particularly Black borrowers in community property states.
The National Association of Real Estate Brokers (NAREB) issued the call to action on Friday, urging the FHA to stop requiring lenders to count a non-borrowing spouse’s debts when processing mortgage applications – unless that spouse is legally obligated to repay the loan. The group’s president, Ashley Thomas III, has rallied Congress, housing advocates, and state regulators behind the push.
Under current FHA guidelines, borrowers in community property states must have their non-borrowing spouse’s debts factored into their debt-to-income ratio, even if that spouse is not listed on the loan or the property title. The agency, however, does not allow lenders to count that same spouse’s income unless he or she is an official co-borrower. The policy applies in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
NAREB argues the rule inflates a borrower’s debt load on paper, reducing purchasing power and pushing some families out of the market altogether.
“FHA regulations create a punitive double standard that unfairly excludes creditworthy households from achieving the American dream of homeownership,” Thomas said. “When we force lenders to count a spouse’s debts without counting their income, we are actively punishing married couples. This outdated practice restricts mortgage access and severely hurts families trying to become homeowners.”
The issue carries particular weight for Black borrowers, NAREB noted. Black households currently receive between 12% and 15% of all FHA loans, and Black homeownership stands at just over 45%, compared with more than 74% for White households. NAREB highlighted that Black borrowers in community property states already face higher loan denial rates and receive smaller approved mortgage amounts than their White counterparts.
Thomas said the proposed change would bring the FHA in line with standards already used by Fannie Mae and Freddie Mac, both of which evaluate only the financial obligations of the individuals signing the note.
“The goal is to ensure consistency, logic, and fairness in how we evaluate borrower obligations,” Thomas added. “It is time for the Federal Housing Administration to modernize its interpretation of state laws and align its rules with the conventional market so that all spousal obligations are handled uniformly across federal agencies.”
NAREB also flagged potential violations of the Equal Credit Opportunity Act, which prohibits lenders from treating applicants less favourably based on marital status.
