• In 2022, nearly one in 12 Black families that did not own were income mortgage-ready – meaning they could afford the monthly cost of a new mortgage for the typical home in their metro area.
• Rising mortgage rates caused the share of mortgage-ready Black families to decrease to 7.8% from 26.7% in 2012. However, the difference between the share of White families and Black families that can comfortably afford to take on a mortgage decreased from the peak 7.9 percentage points in 2012 to 4.7 percentage points in 2022.
• While higher home values and higher mortgage rates lowered the share of mortgage-ready families, the median family income of Black renters increased by 37.7% compared to 35.1% for white families from 2012 to 2022.

In 2022, 9.4M Black families did not own the home they lived in, according to the latest American Community Survey. Among those, roughly 738,000 families were “income mortgage-ready”, meaning the share of their income spent on a mortgage payment for the typical home in their local market [1] would have been 30% or lower. Since 2022, mortgage rates have fallen, incomes have risen faster than home values, meaning housing affordability has improved slightly.

Among the 50 largest metros, the housing markets where Black families are most likely to be mortgage-ready

Among the 50 largest metros, the housing markets where Black families are least likely to be mortgage-ready

Lower family incomes mean that Black renters are less likely to be income mortgage ready when compared to White families that rent. However, this gap has been declining.

Nationally 73% of non-hispanic white households report owning their home compared to just 44% of non-hispanic Black households. For families, the gap is similar. Nationally, 69% of non-hispanic white families own their home compared to only 42% of non-hispanic Black families. [2]

Although the homeownership gap between all non-hispanic white and Black families is large (27 percentage points), the mortgage-readiness race gap is much smaller. 

Specifically, 7.8% of Black families that do not own the home they lived in were income mortgage-ready compared to 12.5% of non-hispanic white families – only 4.7 percentage points of disparity in 2022 compared to almost 8 percentage point difference a decade ago. This is because the proportion of mortgage ready white families has decreased more dramatically during that time period – down from 34.6% in 2012.  

The change did not come from a disproportionately larger increase in homeownership among white families that caused the mortgage ready share of white families to decrease more significantly. The increase in share of homeowners has been roughly the same for both groups. The share of white families that own increased by just 1.5 percentage points compared to 1.4 percentage points for Black families. Instead, it’s a larger increase in Black family income that may have played a key role. 

While higher mortgage rates and higher prices hurt everyone, the median family income of renters rose more for Blacks than for Whites during that period.

[1] This assumes a family can only afford a 3% down payment at the highest mortgage rate recorded each year based on applications submitted to the Freddie Mac from lenders across the country. A lower down payment implies higher monthly mortgage payments, raising the threshold income needed to be considered mortgage ready in this analysis.
[2] A household consists of everyone who lives in the housing unit. Families are related individuals within a household. Some families may live in owner occupied housing but aren’t the primary family and may not own the housing unit. Data comes from IPUMS USA. The FAMUNIT variable was used to count families. A White or Black family is defined by the race of the first recorded member of each family.