SALT LAKE CITY — According to a report from Zillow, despite typically having higher income levels and lower mortgage denial rates, Asian and Pacific Islander households are typically denied mortgages due to a debt-to-income ratio considered to be too high.
Most denials for Asian and Pacific Islander applicants are due to having insufficient cash to close on a home, more so than other races.
However, Asian families applying for mortgages don't face the same issues accessing credit like Black and Hispanic families, but Pacific Islander applicants do — almost a quarter of their mortgage denials are based on credit history.
In terms of maintaining home ownership, Asian and Pacific Islander homes are more highly concentrated in the most expensive markets in the country, which means higher home values which uses a larger portion of income.
"Asian and Pacific Islander families tend to live in some of the most expensive housing markets in the country, places like San Jose or San Francisco; large, west coast metros that face significant housing shortages,” says Orphe Divounguy, a senior economist with Zillow. “Because of that, these families tend to stretch their budgets to achieve and maintain home ownership. That’s why they face significant barriers to keep that home, even if they manage to get on the housing ladder."
That means housing cost burdens could be higher for Asian and Pacific Islander homeowners even though they have higher incomes on average.
Divounguy also says it's important for potential home buyers to know they have to talk to a mortgage professional first to try and figure out what it is they can afford.
Many people know all about the down payment, but not everyone knows they also have to have the closing costs on hand in order to get the keys to that new house.
