Despite decades-long housing inequities, Latino households are projected to drive 70 percent of net homeownership gains through 2040. These projections are correlated to the fast growth of the Latino population in the U.S., with many aging into their prime homebuying years in the next two decades.

However, Latino homeowners face significant obstacles on their path to homeownership—from language barriers to mortgage access—and policymakers and housing experts must take a strategic approach to housing solutions.

The State of Hispanic Homeownership in the U.S. 

Decades of discrimination have shaped today’s racial gaps in homeownership. In 2021, Latino households in the U.S. had a 51 percent homeownership rate in 2021—22 percentage points lower than white non-Hispanic households.

During the COVID-19 pandemic, Black and Latino homeownership rates increased by 2 and 2.5 percentage points—but white homeownership increased by just one percentage point. Research demonstrated that historically low-interest rates during the pandemic spurred on a new surge of home-buying, particularly with a larger share of Black and Latino households. Maintaining this momentum in the wake of the pandemic, however, is challenging and requires more intentional strategies.

Barriers to Hispanic Homeownership in the U.S. 

Latino communities face a significantly different set of barriers to accessing homeownership in comparison to other minority communities in the U.S.

In addition to universal challenges, such as the national housing shortage and rising interest rates, Latino households are disproportionately likely to be unbanked or underbanked, may experience language barriers, and may not have access to traditional mortgage offerings without a Social Security Number (SSN).

Unbanked or Underbanked Individuals 

Similar to Black families, Latino households are disproportionately likely to be unbanked or underbanked, leading to starkly lower incomes and less wealth accumulation.

8.4 percent of Hispanic households are unbanked, compared to just 1.7 percent of white households. Of those surveyed without a bank account, 21 percent of respondents indicated not having enough money to meet the minimum balance requirement, 13.2 percent cited distrust in banks generally, and 6 percent cited bank account fees.

The last few decades have been particularly detrimental to building trust—and equity—in the U.S. financial system, particularly for Black and Brown communities. The 2008 financial crisis decimated Latino and Black wealth through the prevalence of subprime mortgage loans: One study found that Hispanic families lost 44 percent of their wealth between 2007 and 2010, which has a continuing impact on trust in the financial system today.

Language Barriers 

Latino households with limited English proficiency face greater barriers to navigating and shopping in the mortgage application process. Data from the American Community Survey found that Latinos who speak only English or speak English very well had the highest rates of homeownership.

Cities across the country have pursued different strategies to alleviate these disparities. In Chicago, one example of overcoming language barriers and government trust was through the creation of flyers, applications, and webpages in both English and Spanish to highlight rental assistance. The City also partnered with Chicago Public Schools and Spanish-language news organizations to promote and publicize the program.

Higher Mortgage Denial Rates 

Latinos face significantly higher mortgage denial rates in comparison to potential white homebuyers. Most denials are correlated to debt-to-income ratios or credit scores—neither of which are race-neutral, since this type of financial backing has been far less available to people of color for decades.

ITIN Mortgages 

One particular barrier to housing faced by the Latino community is the lack of mainstream mortgage financing for Individual Tax Identification Number (ITIN) holder households—a majority of whom are Latino.

The IRS created the ITIN designation in 1996 to enable individuals without a Social Security Number (SSN) to pay taxes. Obtaining an ITIN is a complex process, however, in many states, it unlocks opportunities to open a bank account, obtain a driver’s license, or start a business. While these actions are feasible with an ITIN, most mortgages still require an SSN.

While ITIN mortgages can be found in the United States, the current market is relatively small. One study from the Urban Institute found that between 5,000 and 6,000 ITIN mortgages were made in 2023—but estimated that it could range from 73,000 to 88,000 if certain barriers were gone, leading to a transformative impact for many ITIN holder households in the U.S.

Multigenerational Latino Households 

Latino households tend to be multi-generational, with at least two adult generations and grandchildren younger than 25 years old living under one roof. There are currently 64 million multigenerational households, or 20 percent of the U.S. population. For Hispanic families, 27 percent are multigenerational. This reality leads families to need larger, more expensive homes.

Closing the Gap: How Cities Can Improve Latino Homeownership in the U.S. 

To bolster homeownership for Latino communities, cities and policymakers must develop a deeper, more nuanced understanding of the unique barriers that prevent Hispanic and Latino populations from accessing safe and stable housing.

Based on the current research available, experts suggest implementing the following strategies:

• Expand down payment assistance programs: Accessing capital for a down payment is a common barrier to homeownership for many Latino applicants.
• Support programs that expand credit access: Outreach programs to build trust in credit institutions and reformed lending standards to better support Hispanic applicants are critical steps.
• Strengthen opportunities for ITIN mortgages: Expanding access to ITIN mortgages will have a positive impact in creating new opportunities for mortgages.
• Build expanded language access for programs, services, and policies: Creating program materials in both Spanish and English can make programs more accessible and trustworthy for potential Hispanic applicants.

At Smith NMTC Associates, we’ve pioneered a New Markets Tax Credits (NMTC) funding model to bring affordable, for-sale homeownership to many underserved—and predominantly Black and Brown—communities in the U.S.

For nonprofit developers, investors, and lenders, we see a significant opportunity to leverage the NMTC program as a tool to drive more housing opportunities for Latino homeowners. To learn more about how the NMTC program can serve your community and your constituents, reach out to us.