Understanding Overt Discrimination in Lending and Housing
If you’ve been treated differently by a mortgage lender or landlord because of your race, sex, religion or disability status, you may have experienced housing discrimination. This could look like your landlord refusing to consider your disability-related income, or your lender charging a higher interest rate because you live in a predominantly non-white neighborhood.
Overt discrimination in lending is illegal — as are certain types of more covert discrimination — but it can still be a barrier to homeownership. We’ll go over your rights and the laws around lending discrimination, so you can protect yourself from unfair lending practices.
- Overt discrimination in lending is illegal under federal law.
- Consumers are protected by the Fair Housing Act (FHAct) and Equal Credit Opportunity Act (ECOA).
- Understanding common warning signs can help you recognize and report discrimination earlier.
Lending and housing discrimination explained
Lending discrimination is common — for example, mortgage denial rates are higher for Black borrowers in all 50 of the country’s biggest metro areas — so it’s important to keep an eye out for unfair practices.
If a lender or landlord takes action or makes a decision about your home loan, or other housing-related application based on any of the following protected characteristics, it’s discrimination and it’s illegal.
- Race
- Color
- Religion
- Sex
- Marital status
- Familial status
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Age
With the exception that you must be 18 years old to sign a contract.
- National origin
- Disability
- Whether you receive public assistance
- Acting on your rights under federal credit laws (for instance, disputing errors on your credit report)
Lenders, brokers, insurers, landlords and other service providers aren’t allowed to make decisions based on any of those characteristics. Nonetheless, lending and housing discrimination do occur — commonly, when you’re applying for a mortgage or a rental. However, it can also show up in any other part of the home loan process, such as home appraisals, homeowners insurance policies and mortgage loan modification.
- Persuading an applicant not to apply
- Charging higher interest rates or fees
- Refusing to consider your income because it comes from part-time work, Social Security, pensions, annuities, alimony, child support or public assistance
- Counting your income differently from your spouse’s because of your sex
- Assuming you’ll become a parent or that you’ll stop working because you have children
- Charging you more for an appraisal or refusing to do an appraisal because you live in a predominantly non-white neighborhood
3 lending discrimination types
So far we’ve mostly been covering overt lending discrimination. As the most blatant form of discrimination, it’s typically the easiest to recognize. However, there are more subtle actions a lender can take based on protected characteristics that are just as illegal.
There are three types of lending discrimination:
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Overt discrimination: Refusing to lend or to apply normal guidelines to creditworthy borrowers, simply because they exhibit a protected characteristic.
- For example, a lender says your credit score is too low even though it’s within the range set by their guidelines.
-
Disparate treatment: Refusing to offer the same options or treatment to borrowers because of a protected characteristic.
- For example, a lender takes longer to approve female applicants, or fails to provide Black applicants with the same options that they provide to white applicants.
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Disparate impact: Operating according to policies that have a negative impact on people with protected characteristics, whether that outcome was intended or not.
- For example, let’s imagine a lender has a policy not to underwrite mortgages for less than $150,000. Although the policy seems neutral, in this lender’s area it’s extremely uncommon to find homes that would require loans larger than $150,000 in a non-white neighborhood. Because of this, the policy effectively excludes non-white borrowers.
President Trump passed an executive order in 2025 that removed disparate impact from the purview of federal agencies’ enforcement. Nonetheless, some states and government agencies still use disparate impact when evaluating discrimination cases.
4 ways to protect yourself from lending discrimination
1. Understand mortgage approval guidelines
The guidelines that lenders use in underwriting are publicly available and — when applied equally to all applicants — form the basis of fair treatment in lending. As long as you understand these guidelines, you should have a strong idea of whether you’re experiencing overt lending discrimination.
Take a look at the following items to make sure you understand mortgage guidelines:
- Uniform residential loan application. This will show you what sort of information you’ll need to provide to the lender.
- Minimum mortgage requirements. Set by Fannie Mae and Freddie Mac, the Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA) and U.S. Department of Agriculture (USDA), these requirements tell you exactly which financial factors could preclude you from getting a mortgage.
- How mortgage rates are determined. The mortgage rates that lenders quote you aren’t based on one simple, universal formula. That said, you can get a good idea of where you stand with most of the factors that determine mortgage rates, since they’re based on your financial profile and public information about the mortgage market.
- Lender websites. Lenders often publish their mortgage requirements on their websites, as well as mortgage rates. If you can’t find what you’re looking for, you can also call and ask, for example: “Hey, what DTI ratio do you use to qualify? Which credit score versions do you use to qualify? What is the lowest credit score you use to qualify?”
Looking for lenders? Check out our list of the best mortgage lenders. We also link to each lender’s website in our reviews.
2. Look for red flags
If you notice any of the following red flags, you may be experiencing discrimination:
You’re treated differently in person than you were on the phone or online
You’re being discouraged from applying for a loan
You’re refused credit even though you qualify for it based on the advertised requirements
You’re being pressured or pushed into a specific loan type
3. Ask for assistance
The mortgage process can be confusing, and even if you’re not worried about mortgage discrimination, having an advocate can help you secure the best rates and terms for your home loan. Consider consulting a HUD-approved housing counseling agency for advice and guidance as you shop for mortgages.
4. Compare multiple lenders
If you only get one quote from one mortgage lender, you may not be able to identify whether lending discrimination is occurring. Gathering multiple quotes allows you to see what a competitive rate looks like — and choose the lowest one.
You should also know what the national average mortgage rates are, so you can have an idea of what’s going on in the market and what’s normal.
What to do if you’re experiencing discrimination
- Speak with a manager. If you’re dealing with a mortgage lender, a good first step is to call customer service and report the problem. The lender may be willing to do something to resolve the situation. If you’re dealing with a property management company or landlord, escalate the matter to a manager, supervisor or owner.
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File a complaint with the Consumer Financial Protection Bureau (CFPB). The CFPB exists to protect consumers like you, and lenders don’t want to be in hot water with a government agency.
- You can submit a complaint online or call 855-411-CFPB (2372). The CFPB’s toll-free teletypewriter (TTY/TDD) line can be reached at 855-729-2372
- File a complaint with the U.S. Office of Fair Housing and Equal Opportunity (FHEO). You can file a complaint online, submit a form via snail mail or call to speak with an intake specialist at 800-669-9777. HUD also offers a TTY line at 800-877-8339. If you would rather speak with someone local, FHEO also maintains a contact list for regional FHEO offices, as well as region-specific email addresses for civil rights complaints.
- Contact your state attorney general’s office. Your state attorney general’s office may have a website with information about your state’s equal credit opportunity laws. You may be able to see there if the creditor violated state laws, or get connected with someone who can help you.
- Contact a lawyer. If you’ve experienced discrimination, you have the option of suing the creditor in federal district court, especially if you’ve incurred damages. Start by researching legal assistance organizations in your area, which you can find by searching online for your state, and the terms “legal aid” or “legal assistance.” You can also try using this directory.
Frequently asked questions
The statute of limitations for filing a lawsuit under the Fair Housing Act is two years after the last discriminatory action. However, you may have more time to file under different federal, state or local laws.
You can typically file a complaint against your landlord through HUD, state or local housing agencies or your state attorney general’s office. A good place to start is by doing a Google search using your state’s name and “housing discrimination complaint” as the search terms.
Housing discrimination is sadly common. In 2024, more than 32,000 complaints were filed — a 5% decrease from the number recorded in 2023, according to the 2025 Fair Housing Trends Report from the National Fair Housing Alliance.
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