December 5, 2021


Let'S Talk Law

Mortgage Lending for LGBTQ+ People

Members of the LGBTQ+ community have long faced discrimination in employment, housing, and access to what the law calls “public accommodations,” such as hotels and restaurants. While 92{48802e074c5f965745cb161aba42404553935aa8d7cf9aecda1745fcd7825477} of lesbian, gay, bisexual, and transgender adults in a 2013 Pew Research Center survey said that society had become more accepting in the previous decade, the law has tended to lag behind. A prime example are the laws that govern mortgage lending.

New laws—or amendments to previous laws—seeking to remove bias now use language including “sexual orientation and gender identity.” These two terms provide protections that are inclusive of the broad range of members of the LGBTQ+ community: Lesbian, gay, and bisexual refer to a person’s sexual orientation, and transgender refers to a person’s gender identity. Q refers to people who identify themselves as either “queer” or “questioning,” while the plus sign stands for those with sexual orientations or gender identities other than LGBTQ.

Key Takeaways

  • Neither the Fair Housing Act nor the Equal Credit Opportunity Act explicitly prohibits discrimination against LGBTQ+ people in mortgage lending.
  • However, federal agencies have begun to interpret those laws to include LGBTQ+ people.
  • The proposed federal Equality Act would amend the existing laws to specifically ban LGBTQ+ discrimination in housing, credit, and other areas.
  • Some state and local governments have their own laws to protect LGBTQ+ people from discrimination.

Mortgage Lending Bias: The Evidence

A 2019 study by Hua Sun and Lei Gao of Iowa State University found that between 1990 and 2015, same-sex couples were 73{48802e074c5f965745cb161aba42404553935aa8d7cf9aecda1745fcd7825477} more likely to be turned down for a mortgage than similarly qualified different-sex couples. In addition, same-sex couples who were approved for mortgages paid about 0.02{48802e074c5f965745cb161aba42404553935aa8d7cf9aecda1745fcd7825477} to 0.2{48802e074c5f965745cb161aba42404553935aa8d7cf9aecda1745fcd7825477} more, on average, in interest and fees.

The researchers noted that the difference in approval rates had nothing to do with same-sex couples being any less creditworthy. In fact, they concluded, “We find that same-sex borrowers are less risky overall, as they exhibit similar default risk but lower prepayment risk.” Despite same-sex couples being less risky borrowers, they were still more likely to be turned down for a mortgage.

Another 2019 study, this one by J. Shahar Dillbary and Griffin Edwards of the University of Alabama, looked at the effect of both race and sexual orientation in approval rates for more than 5 million FHA mortgage applications. It found that same-sex male couples, regardless of race, were less likely to be approved for a mortgage than a White heterosexual couple, with Black male couples facing the highest rejection rate and White male couples the lowest. Lesbian couples, however, fared better. They were either statistically indistinguishable from White heterosexual couples in their approval rates or even more likely to be approved.

The obstacles that many LGBTQ+ people face in getting a mortgage have made it more difficult for them to obtain affordable and stable housing. A 2020 study by the Williams Institute at the UCLA School of Law found that while 70.1{48802e074c5f965745cb161aba42404553935aa8d7cf9aecda1745fcd7825477} of non-LGBT adults own their own homes, only 49.8{48802e074c5f965745cb161aba42404553935aa8d7cf9aecda1745fcd7825477} of LGBT adults did. In other studies, the institute found that home ownership is “even lower among LGBT racial minorities and transgender people.”

In addition, many LGTBQ+ people seek out jobs with LGBTQ+-friendly companies and homes in accepting parts of the country. This often means living in cities where housing costs, including mortgage payments, can be far higher than the national average.

Federal Initiatives to Ensure LGBTQ+ Rights

The Fair Housing Act, passed in 1968 and amended in 1988, protects Americans from discrimination based on race, color, national origin, religion, sex, family status, and disability. However, it doesn’t specifically mention sexual orientation or gender identity. A bill introduced in 2019, the Fair and Equal Housing Act, would add “sexual orientation” and “gender identity” to the list.

Meanwhile, that omission in federal housing law has provided a shield for other discriminatory lending practices, Dillbary and Edwards say in their report. “Not only is explicit sexual orientation discrimination permitted; it can be used by lenders as a ‘defense,'” they write. “For example, a lender who discriminated against a black applicant could escape liability if it shows that the source of discrimination was not the applicant’s race (a protected characteristic that gives rise to liability) but his sexual orientation.”

Some change may be at hand on the federal level. On his first day in office, President Joe Biden signed an executive order titled “Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation.” The executive order, which calls on agency heads to review and revise their policies in accordance with that objective, notes that “People should be able to… secure a roof over their heads without being subjected to sex discrimination.”

Much like the Fair Housing Act, the Equal Credit Opportunity Act of 1974 prohibited discrimination in lending based on race, color, religion, national origin, sex, marital status, age, or the receipt of public assistance, but omitted any reference to sexual orientation or gender identity. On March 9, 2021, however, the Consumer Financial Protection Bureau (CFPB) announced that it would interpret the act’s prohibition against discrimination based on sex to include sexual orientation and gender identity discrimination.

“In issuing this interpretive rule, we’re making it clear that lenders cannot discriminate based on sexual orientation or gender identity,” the CFPB’s acting director, David Uejio, said in the announcement. “The CFPB will ensure that consumers are protected against such discrimination
and provided equal opportunities in credit.”

The CFPB also said it looked forward to “working with Congress on the Equality Act, which, if enacted, would codify protections for consumers against sexual orientation and gender identity discrimination in all financial products and services.” The Equality Act—which passed in the House on Feb. 25, 2021, and awaits action in the Senate—would prohibit discrimination based on sex, sexual orientation, and gender identity in housing, credit, employment, education, and other areas.

Initiatives on the State and Local Level

According to the U.S. Department of Housing and Urban Development, 22 states and the District of Columbia have laws banning housing discrimination based on sexual orientation and all but two of those also ban discrimination based on gender identity or expression.

While that list includes some of the nation’s most populous states—such as California, Illinois, and New York—GLAAD, an advocacy group, maintains that “these laws only cover approximately 48{48802e074c5f965745cb161aba42404553935aa8d7cf9aecda1745fcd7825477} of the American LGBT population, leaving an unacceptable majority of LGBTQ people vulnerable to lawful discrimination.”

In addition to the states, at least 330 municipalities “fully and explicitly prohibit discrimination against LGBTQ people in employment, housing, and public accommodations,” according to the
Movement Advancement Project, a nonprofit research organization.

In Florida, for example, which has no statewide anti-discrimination law, 12 counties (out of 67), 28 cities, and four other municipalities have ordinances prohibiting discrimination based on sexual orientation, and 12 counties, 26 cities, and five other municipalities have them to cover gender identity. As a result, the organization estimates that 60{48802e074c5f965745cb161aba42404553935aa8d7cf9aecda1745fcd7825477} of the state’s population is covered by such laws. In some other states, however, that percentage is as low as 0{48802e074c5f965745cb161aba42404553935aa8d7cf9aecda1745fcd7825477}.

At best, “local ordinances, state laws, federal court rulings, and more create a patchwork of nondiscrimination protections for LGBTQ people across the country,” the Movement Advancement Project notes.


The U.S. Department of Housing and Urban Development and the Consumer Financial Protection Bureau have online complaint forms for people who believe they’ve been discriminated against.

Where to Get Help if You Need It

A number of government agencies and nonprofit organizations field complaints and take action on behalf of LGBTQ+ people who believe they have been discriminated against in violation of current laws. They include:

U.S. Department of Housing and Urban Development (HUD). While the Fair Housing Act doesn’t explicitly cover discrimination based on sexual orientation or gender orientation, HUD—which administers the law—now urges people who identify as LGBTQ+ to file a complaint if they believe they’ve been discriminated against. “HUD is committed to investigating violations of the Fair Housing Act against all individuals regardless of their sexual orientation or gender identity,” the agency says.

Consumer Financial Protection Bureau (CFPB). The CFPB handles discrimination complaints
against lenders and mortgage brokers based on the Equal Credit Opportunity Act (ECOA). That law, like the Fair Housing Act, doesn’t mention LGBTQ+ discrimination per se, but the CFPB website says that “Currently, the law supports arguments that the prohibition against sex discrimination also affords broad protection from discrimination based on a consumer’s gender identity and sexual orientation.”

American Civil Liberties Union (ACLU). The ACLU has an online form specifically for submitting LGBTQ+ and HIV-related discrimination complaints. The organization says, “We’ll let you know whether we can give you legal assistance. If we can’t, we’ll try to find another organization that may be better equipped to help.”

Lambda Legal. This nonprofit civil rights organization for the LGBTQ+ community has an online help desk that provides information and resources regarding housing and other types of discrimination but doesn’t offer individual legal advice.

In addition to those national resources, your state or local housing agency may be of help, as well as a local legal aid society or a private attorney with expertise in discrimination matters.