Understanding the Unequal Costs of Native American Homeownership

Abstract

Using confidential Home Mortgage Disclosure Act data from 2018 through 2021, we document significant disparities in home loan prices between Native American borrowers, whether living on or off federally recognized American Indian reservations, and White borrowers. Differences in underwriting characteristics such as credit score and loan amount do not explain these disparities but do explain considerably more of the gap between off-reservation Native American borrowers and White borrowers. The price gap is driven mostly by the disproportionate use of home-only loans, which are not secured by land, by both on- and off-reservation Native American borrowers. The likelihood of using home-only loans correlates with property rights, but this factor cannot fully explain the greater reliance on home-only loans by Native Americans.