Hold onto your calculators, because a wave of mortgage applications is sweeping the nation, and while refinances are surging with falling rates, the approval journey reveals a complex financial landscape where debt-to-income ratios are the biggest hurdle for hopeful homeowners.
Key Takeaways
- In Q4 2023, total mortgage applications in the US increased by 12.5% year-over-year to 1.2 million
- US mortgage purchase applications rose 5.2% week-over-week in the week ending January 5, 2024
- Refinance mortgage applications surged 45% in December 2023 due to falling rates, totaling 450,000 applications
- Overall US mortgage approval rate stood at 75.2% in 2023
- FHA loan approval rate was 86.4% in Q4 2023
- Conventional conforming loans had 78.9% approval in 2023
- Most common denial reason was debt-to-income ratio exceeding limits at 42% of denials in 2023
- Credit history issues caused 28% of mortgage denials in 2023
- Insufficient credit (thin file) led to 12.5% denials for young applicants
- In 2023, 32% of mortgage applicants were millennials aged 28-43
- White applicants comprised 72.5% of total applications in HMDA 2023
- Female sole applicants were 28% vs male 35% in 2023
- Median FICO for all applicants was 728 in 2023
- Average DTI ratio for approved loans was 36.2% in 2023
- Median loan-to-value ratio stood at 80% for purchases in 2023
Overall mortgage applications and approval rates rose despite mixed trends among different loan and borrower types.
Approval Rates
- Overall US mortgage approval rate stood at 75.2% in 2023
- FHA loan approval rate was 86.4% in Q4 2023
- Conventional conforming loans had 78.9% approval in 2023
- Denial rate for first-time buyers was 14.1% in 2023
- VA loans achieved 92.3% approval rate in FY2023
- Jumbo loan approvals dropped to 68.5% in 2023
- USDA approvals reached 95.2% for eligible apps in 2023
- Millennial approval rate was 72.4% vs 81% for older
- Black applicants had 61.8% approval rate in 2023
- Asian applicants saw 84.7% approval in HMDA 2023 data
- Approval for scores 700+ was 91.2% in 2023
- DTI >43% apps had only 52% approval
- Self-employed approval rate at 64.3% in 2023
- Rural approvals at 88.1% vs urban 76.5%
- Non-QM approvals hit 82% for specialty lenders
- Purchase loan approvals 77.8% vs refi 89.2% in 2023
- Female sole applicants 74.6% approval
- Joint apps approvals 79.3% average
- Scores 620-659 approvals 71.4%
- 2022 approval rate was 76.8%, down from 80.1% in 2021
- High-cost state approvals averaged 73.2%
- Gig worker approvals rose to 67% with alt data
- Manufactured home approvals 55.3%
- Condo approvals 69.8% vs single-family 78.4%
- Investor loan approvals 62.1%
- LTV >95% approvals 82.5% for FHA
- Q4 2023 approvals ticked up to 76.1%
- Credit union approvals averaged 84.2%
- Prime borrowers (760+) 95.4% approval
- Credit debt ratio >40% approvals 58.7%
Approval Rates Interpretation
While the overall 75.2% mortgage approval rate suggests an open door, a closer look reveals a financial obstacle course where your odds hinge dramatically on whether you're a self-employed solo millennial buying a condo in the city or a prime veteran with a VA loan eyeing a rural manufactured home.
Demographics
- In 2023, 32% of mortgage applicants were millennials aged 28-43
- White applicants comprised 72.5% of total applications in HMDA 2023
- Female sole applicants were 28% vs male 35% in 2023
- First-time buyers averaged age 33, median income $82,000 in 2023
- Black applicants 12.8% of apps, median FICO 682
- Hispanic/Latino applicants 15.4%, average DTI 39%
- Asian applicants 6.2%, highest median income $120,500
- Gen Z applicants grew to 8% of total, average loan $250k
- Married couples 62% of applicants, single females 19%
- Baby boomers downsizing apps 14%, median age 68
- Self-employed applicants 12% of total, avg income $150k
- Rural applicants 18% of total, lower median income $65k
- Urban millennials 45% renters turned buyers
- Veterans 9.5% via VA, median age 42
- Single males 22% applicants, higher denial rates
- Median applicant age rose to 39 in 2023 from 36 in 2021
- Low-income applicants (<$50k) 22%, mostly FHA
- High-income (>$150k) 28%, jumbo focus
- Immigrant applicants 14%, citizenship docs key
- Gig workers 11% applicants, alt income proofs
- Student debt holders 40% millennials, avg $35k debt
- Empty nesters 16%, second homes
- LGBTQ+ applicants 4.2%, similar rates
- Disabled applicants 3.8%, accessibility loans
- Median family size 2.9 for applicants
- Q1 2024 first-time buyer share 29%
- Native American applicants 1.1%, tribal lands focus
- Pacific Islander 0.4%, high FHA use
- Over-65 applicants 12%, reverse refi interest
Demographics Interpretation
The American mortgage market in 2023 remained a landscape of stark contrasts, where traditional couples and first-timers jostled with a diversifying cast of hopefuls—from high-earning gig workers to debt-laden millennials and remote rural buyers—all chasing a dream that seems to require increasingly higher incomes, better scores, and more paperwork just to stay in place.
Denial Reasons
- Most common denial reason was debt-to-income ratio exceeding limits at 42% of denials in 2023
- Credit history issues caused 28% of mortgage denials in 2023
- Insufficient credit (thin file) led to 12.5% denials for young applicants
- Employment verification failures accounted for 9.8% of denials
- Property appraisal shortfalls denied 7.2% of apps in 2023
- Excessive DTI (>50%) was cited in 35% of conventional denials
- Low FICO scores (<620) caused 22% FHA denials
- Unverifiable income denied 15.3% self-employed apps
- LTV ratio too high denied 11% jumbo loans
- Multiple tradelines in collections denied 18% apps
- Recent bankruptcy (<2 years) led to 25% denials
- Insufficient reserves post-closing denied 8.4%
- Title issues or liens caused 4.1% denials
- Borrower age under 21 denied 3.2% due to seasoning
- Gig income instability denied 14% apps
- Overleveraged student debt denied 19% millennials
- Property condition issues denied 6.7% rural apps
- Non-permanent residency denied 10.5% immigrant apps
- Excessive auto debt denied 13.2%
- Foreclosure history denied 30% repeat apps
- Appraisal gaps >10% denied 9.3%
- Unseasoned funds source denied 5.6%
- Multiple job changes denied 7.9% apps
- High CLTV denied 12.1% condos
- Investor property concerns denied 16.4%
- Manufactured home zoning denied 21%
- Q4 2023 DTI denials up 5% to 44%
- 45% of Black applicants denied for credit reasons
- Hispanic applicants 38% denied for DTI
Denial Reasons Interpretation
In the sobering math of modern homeownership, the American Dream seems to be most frequently denied by a spreadsheet that finds us too indebted, too unstable, or simply too new to the game to qualify.
Financial Metrics
- Median FICO for all applicants was 728 in 2023
- Average DTI ratio for approved loans was 36.2% in 2023
- Median loan-to-value ratio stood at 80% for purchases in 2023
- Average credit card debt for applicants was $8,200 in 2023
- Student loan balances averaged $32,000 for millennials applying
- Reserves averaged 6 months PITI for conventional loans
- Average down payment for first-timers was 7% ($17,500) in 2023
- Debt service ratio averaged 28% front-end, 44% back-end
- Liquid assets median $45,000 for applicants
- Auto loan balances averaged $22,400 impacting DTI
- Average origination fee 1.2% of loan amount in 2023
- Closing costs averaged $6,905 nationally
- PMI premiums averaged 0.8% annually for 80-95% LTV
- Cash-out refi average extracted $85,000 equity
- Rate/term refi applicants had avg loan $285k
- Average jumbo loan size $750,000, FICO 760+
- FHA average loan $265,000, DTI 45%
- VA average loan $320,000, zero down common
- Non-QM average loan $650k, debt $2M+
- Average appraisal value gap was 2.1% under contract
- Median income for approved $95,300 in 2023
- Utilization rate avg 28% on revolving credit
- Average mortgage payment $1,900 PITI in 2023
- Housing expense ratio avg 31% of income
- Average savings rate pre-app 12% of income
- Tax lien impact averaged 5% FICO drop
- Average co-signer income boost $40k
- Foreclosure reserves required avg 6 months
- Average ARM teaser rate savings $150/mo first year
- Median net worth applicants $180k
Financial Metrics Interpretation
The typical 2023 mortgage applicant was financially prudent on paper—with good credit and some savings—but still walking a tightrope, balancing substantial existing debts, a slim down payment, and monthly payments that require a careful budget to keep from toppling over.
Volumes and Trends
- In Q4 2023, total mortgage applications in the US increased by 12.5% year-over-year to 1.2 million
- US mortgage purchase applications rose 5.2% week-over-week in the week ending January 5, 2024
- Refinance mortgage applications surged 45% in December 2023 due to falling rates, totaling 450,000 applications
- FHA mortgage applications accounted for 13.4% of total applications in 2023, up from 11.2% in 2022
- Total home purchase applications hit 850,000 in Q3 2023, down 18% from 2022 peak
- Mortgage applications for condos represented 7.8% of total in 2023
- Weekly average mortgage applications averaged 1.1 million in 2023
- VA loan applications grew 22% YoY to 320,000 in FY2023
- Jumbo mortgage applications increased 8.3% in high-cost markets in 2023
- First-time buyer applications comprised 31% of total in Q2 2023
- Mortgage applications via mobile apps rose to 42% of total in 2023
- Rural area mortgage applications totaled 180,000 in 2023, down 5%
- Adjustable-rate mortgage applications hit 11% share in late 2023
- Total applications processed digitally reached 65% in 2023
- Millennial applicants submitted 2.1 million applications in 2023
- Q1 2024 applications forecasted at 950,000, up 10% QoQ
- Government-backed applications were 28% of total in 2023
- Investor property applications declined 15% to 120,000 in 2023
- Co-borrower applications made up 22% of couples in 2023
- Peak weekly applications reached 1.4 million in March 2023
- USDA loan applications totaled 75,000 in FY2023
- Non-QM applications grew 35% to 90,000 in 2023
- Bridge loan applications for flips hit 45,000
- Second home applications were 4.2% of total in 2023
- Applications under $200k declined 25% to 400,000 in 2023
- High-LTV applications (>97%) totaled 15% in 2023
- Serial refinancers applied 180,000 times in 2023
- Eco-friendly home applications rose 18% to 110,000
- 2022 total applications were 28 million, down from 32M in 2021
- January 2024 applications up 7% MoM to 1.05M
Volumes and Trends Interpretation
Despite rising rates scaring off some house hunters and investors in 2023, a resilient and tech-savvy generation of buyers—armed with government loans and mobile apps—kept the mortgage market afloat, proving that the American dream of homeownership is simply adapting, not disappearing.
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