Rural mortgage denials: what 10.7 million applications say about credit history and appraisals

On June 24, 2026, FHFA proposed replacing the rule that sets how Fannie Mae and Freddie Mac serve three markets: manufactured housing, affordable housing preservation and rural housing.¹ Describing the rural market, footnote 31 says:

The rule calls this “recent analysis” of HMDA data but does not show it. Footnote 30, just above, cites FHFA’s own analysis of 2024 HMDA data for a different figure: a 65.6% denial rate on manufactured home loans titled as personal property, against 8.8% for site-built homes.¹

FHFA’s Annual Housing Report, released Oct. 30, rated Fannie Mae Low Satisfactory and Freddie Mac High Satisfactory in the rural market for 2025. Freddie Mac bought 7,327 loans in high-needs rural regions against a target of 7,400. For Fannie Mae the report gives 6,688 in its text and 6,866 in its table, against a target of 6,900.⁶

To test the footnote, we took FFIEC’s public HMDA records for every home purchase application filed in 2024 and 2025, 10.7 million in all, and grouped them by the USDA’s nine county types, from metro counties of a million people or more to rural counties whose largest town has fewer than 5,000 people and that do not border a metro area.^4,5 Chapter 08 describes the method.

For conventional purchase loans on site-built, owner-occupied homes, lenders denied 7.2% of decided applications in metro counties in 2025, 8.4% in rural counties next to a metro area and 9.7% in rural counties that are not. Across the nine county types, the rate climbs from 6.3% in small metro counties to 11.3% in the most remote.⁴

A lender can list up to four reasons for a denial. The two lines show how often credit history and collateral were among them, per 100 decided applications. Credit history goes from 1.09 in small metro counties to 2.66 in the most remote, and collateral from 1.03 to 2.18. Collateral is HMDA’s category for problems with the property, including its appraised value. Large metro counties have more collateral denials (1.64) than small ones, which narrows the overall rural gap on collateral.

Scaled to 1,000 decided applications, metro counties had 72 denials and rural counties not next to a metro had 97. Denials citing credit history rose from 9 to 22. Denials citing collateral rose from 15 to 19, about the same increase as debt-to-income. Because one denial can list several reasons, the reason rows add up to more than the total.

As a share of denials, collateral holds steady across the three groups while credit history nearly doubles.

A low appraisal does not always end in a denial. A buyer can renegotiate the price, bring more cash or walk away, and a walk-away is recorded as a withdrawn application. Withdrawals were not higher in rural counties: 16.1% of metro applications were withdrawn in 2025, against 14.4% and 15.4% in the two rural groups. Withdrawals have many causes, so this is a loose check.

Below $300K, remote rural counties had fewer collateral denials than metro counties at the same price: under $100K, 5.21 per 100 applications against 8.06. Above $300K the order reverses. At $600K and up, remote rural applications drew collateral denials 1.81 times as often as metro ones (1.92 against 1.06 per 100), and the 2024 data shows the same pattern.⁴

HMDA does not say what went wrong with the property. Freddie Mac’s rural plan names “limited comparable sales and distance between homes” as rural appraisal problems (chapter 06), and those problems would be expected to grow with the size and price of the property, but the data cannot confirm that link.

Manufactured homes split by loan type. Conventional manufactured home loans, which include loans on homes titled as personal property, were denied 60.1% of the time in metro counties and 59.5% in remote rural counties in 2025. Credit history appeared in 57% to 61% of those denials and collateral in about 3%.

FHA, VA and USDA manufactured home loans were denied far less often, and collateral was the most common reason given. For FHA, collateral appeared in 32% of metro denials and 34% of remote rural ones. In the reasons lenders report on conventional manufactured home loans, the gap FHFA wants to close with chattel lending is mostly a credit gap. Our manufactured housing feature covers what Fannie Mae and Freddie Mac buy today.

Each HMDA record carries a derived metropolitan area code. A record with no county gets 99999, the same code given to non-metro counties. In 2025, 10,096 conventional site-built purchase applications had no county, and 57.4% of them were denied, with credit history in 47% of those denials.⁴

Counted by that field, the non-metro denial rate for this segment is 11.0%. Counted by county, it is 8.4% next to metro areas and 9.7% elsewhere. FHFA does not say which method it used. Fannie Mae’s 2025 to 2027 plan reports 2022 denial rates of 10% nationwide and 17% in high-needs rural regions, 13% and 23% for low- and moderate-income applicants, for a broader set of loans than ours and without a method note.⁹

An FHFA working paper studied appraisals on purchase loans Fannie Mae and Freddie Mac acquired from 2012 to 2016. It found that “approximately 25 percent of properties in rural areas compared to 12.7 percent in urban areas are appraised at more than five percent above contract price,” and attributed the difference to “fewer comparable sales and more heterogeneity across homes.” The authors then tested automated valuation models as a more accurate way to value rural collateral.⁷ An appraisal well above the price overstates the equity behind the loan, which is a risk to the lender and to whoever guarantees the loan.

Freddie Mac’s plan adds that rural appraisals “may also cost more,” which matters more on a low-priced home, and commits to review and update the rural appraisal training it built for lenders and the rural appraisal curriculum it developed with the Appraisal Institute.⁸ Fannie Mae’s plan says multifamily lenders cite “valuation challenges related to the lack of comparable properties” in high-needs rural regions.⁹ Rural lenders’ comments on appraisal fees and travel are collected in our review of the CFPB comment letters.