Drive Growth in Hispanic Homeownership with a Financial Education Strategy

multi-generational Hispanic homeownership
Hispanic homeownership is growing at a record pace despite affordability and inventory challenges across the United States. Fueled by rapidly forming households, a key precursor to homeownership, and younger homebuyers (the median age of Hispanic first-time homebuyers was 30 in 2022, eight years younger than the general population), the Hispanic homeownership rate has continuously increased since 2014, reaching 48.6% in 2022.

With nearly 58% of the Hispanic population aged 45 or younger in 2022, according to the U.S. Census Bureau, the growing market of Hispanic homebuyers is in their prime homebuying years. In 2021, 70.6% of Hispanics who purchased a home with a mortgage were under 45, compared to 63.9% of the general population. The Urban Institute also projects that most new homeowners (5 million) and more than 20% of young households will be Hispanic in the next two decades.

However, many Hispanics continue to face obstacles to entering the market. Fortunately, the majority of Hispanic homebuyers turn to mortgage lenders over banks for a home purchase loan. Mortgage originators who lead with financial education are well-positioned to attract and assist Hispanic consumers by helping them overcome financial challenges, improve their mortgage eligibility and guide them toward homeownership.

Attract Hispanics with financial education that helps them to overcome financial challenges

Financial education plays a prominent role in the Hispanic population’s challenges regarding understanding the mortgage and home buying process. 2022 U.S. Census data shows that 51.7% of Hispanic households rented compared to 25.4% of white households. With personal finance knowledge, especially when it comes to homeownership, often provided by family, the disparity in homeownership rates contributes to the cyclical nature of home renting.

Opportunities: Hispanics have the highest share of homebuyers under 45, so like most young homebuyers, the place to connect with them is on social media. The most popular social media networks to post financial education content to Hispanics are YouTube (85% usage), Facebook (72% usage), Instagram (52% usage) and TikTok (31% usage), according to Pew Research. Check out these top personal finance and mortgage channels on YouTube for inspiration on becoming a finfluencer.

Improve mortgage eligibility, reduce mortgage denials and recover turned down applicants with financial education and tools

In 2022, 11.1% of Hispanics who submitted home purchase mortgage applications (CFPB Home Mortgage Disclosure Act) had their application denied, primarily due to low credit scores and a high debt-to-income ratio.

Hispanics with low down payment savings are often encouraged to apply for FHA loans. However, a higher credit score could help them qualify for conventional financing with a 3.5% down payment, which has a higher approval rate for this demographic of borrowers. If Hispanic homebuyers are provided with financial education early in their homeownership journey to improve their credit health, they could qualify for better mortgage terms and be less reliant on low down payment products, which traditionally have higher interest rates.

Opportunities: Attract Hispanic homebuyers to your business with social media posts that educate on the factors that impact credit scores, creating a household budget, and methods for paying down debt to reduce their debt-to-income ratio. Additionally, providing free financial tools to monitor their credit score and credit report and see how a lower credit score can help them qualify for lower mortgage rates will have a greater impact than financial advice alone.

Address affordability challenges with financial education

Typically, Hispanics are concentrated in high-cost markets and face housing inventory and affordability challenges. While Miami prices are up 9% year over year as of July 2023, according to CoreLogic, prices in Houston are up only 1% and prices in Phoenix are down 4.2%

Hispanics living in multigenerational households are more likely to pool economic resources, with children often signing on as co-borrowers with their parents to purchase a home.

Opportunities: Highlight the financial benefits of homeownership and explain how increased home prices also equate to increased equity, which leads to generational wealth for Hispanic families.

Mortgage lenders and originators who partner with builders offering multigenerational housing can promote properties that suit these households and loan products that can help them purchase the homes. Additionally, mortgage lenders can assist renters in becoming homebuyers by considering additional data such as on-time rental payments and supplemental income sources from family members who are not a party to the mortgage but contribute to the household income in underwriting mortgage applications.

Advise self-employed Hispanics how to document their income to qualify for a mortgage

The Hispanic population has a higher rate of small business owners (1.7x) than the non-Hispanic population, and many are supplementing their small businesses and supporting families by rideshare driving. This increase in self-employment has led to significant wealth creation, where self-employed Hispanics make five times the income of the rest of the Hispanic population. However, for many self-employed Hispanics, owning a business has made purchasing a home more challenging.

Opportunity: As 41% of self-employed Hispanics believe alternative sources of income require more or additional documentation, and 34% believe they need a higher credit score or down payment to qualify for more loans, there are opportunities to educate younger Hispanics on the eligibility requirements for a mortgage and the responsibilities of being a co-borrower.

Additionally, providing digital verification services enabling borrowers to electronically sign in to the payroll systems of companies where they are W2 employees and independent contractors will make it easier to verify their employment and income.

FinLocker can help mortgage lenders and originators attract, educate and nurture Hispanic homebuyers

According to Freddie Mac, 39% of Hispanic adults under 45 who don’t have a mortgage have the credit characteristics to qualify for a mortgage, which is the largest near mortgage-ready population of any racial or ethnic group. Like many first-generation homebuyers, prospective Hispanic homebuyers often require more guidance from loan officers and real estate agents to understand their potential for homeownership.

FinLocker provides an inclusive solution to assist the 7.9 million Hispanics aged 45 and under with the credit characteristics to qualify for a mortgage and the 2.8 million near mortgage-ready to achieve and sustain homeownership. Mortgage lenders can private-label their FinLocker app to help prospective Hispanic homebuyers improve their financial fitness and qualify for a mortgage.

First-time homebuyers can see their current mortgage eligibility status with the Homeownership Snapshot and receive an action plan to overcome any financial barriers to get mortgage ready, using the platform’s tools to build and monitor their credit, budget to pay down debt to reduce their debt-to-income ratio and create a trackable goal to save their down payment.

When they’ve achieved mortgage readiness, homebuyers can present themselves to their sponsoring originator or lender with their identity, credit, employment, income, and assets verified inside their FinLocker to get pre-qualified and start their home search. The property search widget inside the FinLocker app enables homebuyers to search for single-family and multi-family homes in their preferred neighborhoods. It also highlights homes that qualify for down payment assistance for borrowers who need additional financial assistance.

Watch our self-service demo online or schedule a personal consultation to see the latest FinLocker features.

To help lenders reduce costs, time to close and risk, and streamline their process of verifying a borrower’s assets, employment and income, FinLocker provides our online verification service platform through Encompass® by ICE Mortgage Technology™. The platform can verify the employment and income of 85% of the U.S. workforce, including gig workers, through our partnership with Argyle and verify assets from approximately 18,000 financial institutions through our partnership with Fiserv.

Watch short demos to see the quick and easy process for loan processors to order FinLocker verification services through Encompass®, send requests to borrowers, and the borrower experience.


National Association of Hispanic Real Estate Professionals (NAHREP)

Pew Research

United States Census Bureau

Urban Institute

Related Posts