Black homeownership still lags more than 20 percentage points behind

Black homeownership still lags more than 20 percentage points behind

Written by Malcolm Davis

As a Black real estate professional and a Black man, this topic is personal. The numbers show that Black homeownership still lags more than 20 percentage points behind White homeownership in the United States, and the gap has barely moved in decades. Behind those statistics are real families who worry about being taken advantage of, losing a home, or making a big mistake they do not fully understand.

This blog is not about shaming anyone for renting. It is about naming the fears, explaining where they come from, and showing how to move from fear to informed action.

The History Behind the Fear

Many Black families do not just fear the mortgage payment; they fear the system. That fear is not imaginary. For generations, Black people were locked out of fair access to mortgages, safe neighborhoods, and honest lending. Even today, Black borrowers are more likely to be denied loans and to pay higher housing cost burdens than other groups, which keeps distrust alive.

When your grandparents or parents have stories of being redlined, steered away from certain areas, denied loans for no good reason, or losing homes due to predatory lending, you do not automatically believe “the system” is on your side. That history becomes a mindset: “Owning is risky for us. Renting is safer.”

So, before talking about solutions, it is important to say clearly: the fear has roots in real injustice. Recognizing that truth is step one.

Common Fears Black Buyers Have About Homeownership

1. Fear of Being Denied or Embarrassed

Black applicants are still denied mortgages at much higher rates than White applicants, even when applying for the same type of loans. People hear about those denials and think: “Why put myself through that?” No one wants to hand over their financial life to a stranger and risk being told they are “not good enough.”

What this feels like:

“My credit is not perfect. They will laugh at my application.”
“I have student loans. They will say I am too much of a risk.”
“I do not make six figures. No way they will approve me.”

This fear often stops people from even sitting down with a lender or a trusted real estate professional to get a realistic picture of what is possible.

2. Fear of Losing the Home

Another fear is: “What if I buy and then lose the house?” That fear is amplified by memories of the 2008 housing crash, sudden job losses, and stories of foreclosure that hit Black communities hard.

People worry about:

Job instability
Unexpected repairs
Rising property taxes
Market crashes

When you are already carrying more financial responsibility for extended family, the risk of a mortgage can feel like too much.

3. Fear of the Fine Print

Many Black buyers are first-generation homeowners. That means there is often no family member to explain:

Closing costs
Escrow
PMI (private mortgage insurance)
Interest rates
Appraisals and inspections

When people do not understand the language, they fear being tricked. And the truth is, some lenders and “investors” do use confusing terms to hide bad deals. That makes the fear of signing the wrong thing very real.

4. Fear of Debt and Long-Term Commitment

A 30-year mortgage can feel like a life sentence. A lot of us were raised to fear debt because debt has hurt our families through credit cards, payday loans, and bad financing.

So the thinking becomes:

“I do not want to be in debt for 30 years.”
“Renting means I can move if things go bad.”
“I would rather stack cash than owe the bank.”

The problem is, rent usually rises while a fixed mortgage does not, and paying rent for 30 years with nothing to show at the end is also a long-term commitment—just without the asset.

5. Fear of Being the First

If nobody in your family owns a home, it can feel like you are stepping into unknown territory. There is mental pressure in being the “first homeowner” in your family or friend circle.

You might ask yourself:

“What if I mess up and become the example of why we don’t buy?”
“What if my family needs help and I cannot help because of the mortgage?”

That pressure can quietly push people back into renting and away from even exploring ownership.

Why Homeownership Still Matters for Black Families

Despite all these fears, homeownership remains one of the most powerful wealth-building tools available. Black home values have increased significantly over the last few years, and Black homeowners have gained substantial equity during that time. That equity can become college money, business capital, or a safety net that renting rarely provides.

Here are key reasons it still matters.

1. Building Wealth Instead of Just Paying Bills

When you pay rent, you are helping your landlord build wealth. When you pay a mortgage (especially a fixed-rate mortgage), more and more of that payment turns into equity over time as the loan balance goes down and, in many cases, the home value goes up.

That equity is:

A cushion in emergencies (via home equity loans or selling)
A tool to help your children or grandchildren
A way to step up into a larger or better home later

For Black families, equity can help close part of the racial wealth gap, which is heavily tied to differences in homeownership and home values.

2. Stability for Your Family

Renters often face:

Annual rent increases
Sudden notices to move
Limited control over their living space

Homeownership does not guarantee perfect stability, but it typically gives:

More predictable monthly payments with a fixed-rate loan
The ability to actually plan long-term
More control over your surroundings (changes, upgrades, and rules)

That stability can be especially important for children—same school, same neighborhood, same environment.

3. A Seat at the Table

Ownership changes how you relate to your neighborhood and public decisions. Owners tend to:

Get more involved in local issues
Pay more attention to zoning, schools, and community planning
Have more of a voice when changes are proposed

For Black communities, owning property in areas that are growing or improving means being part of how those areas change, not just being pushed out.

4. Leaving Something Behind

Many Black families are working to create “first-generation wealth.” A home can be one of the simplest assets to transfer to the next generation.

When you pass, your home can:

Give your children a place to live, or rent out
Be sold to pay off other debts
Serve as a base for a family business or long-term investment

You cannot pass down a lifetime of rent receipts.

What You Should Look Out For (And Ask About)

Fearing what you do not understand is normal. The solution is not to avoid the process but to slow it down and ask questions until you feel clear. Here are specific areas to watch closely.

1. The Loan Type and Terms

There are different types of loans:

Conventional loans
FHA loans
VA loans (for eligible veterans and service members)
USDA loans (for some rural areas)

Key questions to ask:

What is my interest rate, and is it fixed or adjustable?
What is my monthly payment, including principal, interest, taxes, and insurance (PITI)?
How long is the loan term (15 years, 30 years)?
Is there any prepayment penalty if I want to pay it off faster?

If you do not understand any part of the loan estimate, ask your lender or your agent to break it down in everyday language. If they cannot or will not explain, walk away.

2. Total Monthly Payment, Not Just the Mortgage

Many people look at just the principal and interest and think, “I can handle that.” But you must also factor in:

Property taxes
Homeowners insurance
Mortgage insurance (if required)
HOA dues (for some neighborhoods)

Ask:

“What will I actually be paying every month, all in?”
“Can you show me a breakdown on paper?”

You should walk away knowing what will hit your bank account each month, not guessing.

3. Closing Costs and Upfront Money

Closing costs can be several thousand dollars, depending on location and loan size. You may also need:

Earnest money
Inspection fees
Appraisal fees
Prepaid taxes and insurance

Questions to ask:

“What is the estimated total amount I need to bring to closing?”
“Are there any down payment assistance or closing cost assistance programs I qualify for?”
“Can the seller help pay some of my closing costs?”

If you do not understand why a fee is being charged, you have the right to ask for an explanation or even shop around with a different lender.

4. The Condition of the Home

Do not skip the home inspection just to “make the deal work.” An inspection helps you learn about:

Roof condition
Foundation issues
Plumbing and electrical safety
HVAC (heating and cooling)

Ask your inspector:

“If I buy this home, what repairs are urgent?”
“What is likely to break or need replacement within the next 5–10 years?”
“Can you explain this issue in plain language?”

Then talk with your agent about whether to:

Negotiate repairs
Ask for seller credits
Walk away if the problems are too serious

5. Neighborhood Trends and Long-Term Potential

Because Black neighborhoods have historically been undervalued and under-appraised, Black homeowners sometimes face appraisal gaps and lower valuations compared with similar homes in majority-White areas. That does not mean you should never buy in a Black neighborhood, but you should be strategic.

Things to consider:

Are there investments or improvements happening in the area (parks, schools, transportation)?
Is the crime rate trending up or down?
Are there signs of new businesses or services moving in?

Ask your agent for:

Recent sale prices of similar homes (comparables)
Information on how long homes sit on the market in your area
Data on local appreciation over the past few years

You are not just buying a building; you are buying into a community and its future.

6. Affordability and Budget Pressure

A mortgage should not leave you gasping for air each month. Housing experts often recommend keeping total housing costs at or below about 30 percent of your gross income, although many Black homeowners are currently above that level.

Ask yourself:

“After paying this mortgage and other bills, will I still have money for savings and emergencies?”
“If my income dropped a little, could I still manage this payment?”
“Do I have at least a small emergency fund for car repairs, medical bills, or home issues?”

Being house-rich and cash-poor is not a winning plan.

How to Move From Fear to Action

1. Educate Yourself Before You Start

Take time to learn the basics:

How credit scores work
How down payments really affect monthly payments
What programs exist in your area for first-time or Black buyers

Many nonprofits, housing counselors, and local organizations offer first-time homebuyer classes, often free or low-cost. These can explain:

The loan process
Your rights under fair housing laws
How to avoid predatory lending

Use trustworthy sources and ask questions until you feel confident.

2. Build a Trusted Team

You need a squad, not a solo mission. Ideally, your team includes:

A real estate agent who understands and respects Black buyers and Black communities
A lender who clearly explains options and does not pressure you
An inspector who is thorough and honest
A title/closing company that answers your questions

Look for professionals who:

Respect your budget and decisions
Return calls and messages promptly
Explain, not intimidate

If you ever feel rushed or disrespected, that is a red flag.

3. Start With Honest Self-Assessment

Before looking at houses, look at your finances:

List your monthly income and all bills
Pull your credit reports and scores
Note your savings and emergency cushion

You might find you can buy now—or that you need 6–12 months to clean up credit, reduce debt, or build savings. Both discoveries are wins because they give you a clear plan.

4. Get Pre-Approved the Right Way

A pre-approval letter from a lender gives you:

A realistic price range
More credibility with sellers
A clearer picture of what monthly payments look like

Make sure the lender:

Pulls your full credit report
Reviews income and debts properly
Explains the estimate in plain language

Do not let the fear of hearing “no” stop you. A “not yet” can show you exactly what to work on so that “yes” becomes the next step.

What To Do If You Do Not Understand Something

This is one of the most important sections. Here is what to do if something in the process confuses or worries you.

1. Say Out Loud: “Explain That Again.”

You have the right to:

Slow down the conversation
Ask the same question multiple times
Request that things be written out and broken down

Try phrases like:

“I am not comfortable signing this until I understand it. Can you explain it in simpler terms?”
“Can you show me how you calculated that payment?”
“If I sign this, what exactly am I agreeing to?”

Anyone offended by those questions is not someone you need on your team.

2. Bring Someone You Trust

If you are not comfortable going to appointments alone, bring:

A family member
A friend
A colleague with experience

They can:

Help you listen
Ask questions you might miss
Help you process information afterward

Just remember: your trusted person should support your goals, not talk you out of them out of their own fear.

3. Get a Second Opinion

If a loan offer, interest rate, or fee seems high or confusing, shop around. You can compare:

Interest rates
Closing costs
Loan types

Getting quotes from more than one lender is normal—and smart. Do not feel guilty for protecting your own financial future.

4. Trust Your Gut

If:

You feel rushed to sign
Your questions are brushed off
You sense something “off” in how you are treated

Pause. You can:

Step back and review the documents at home
Ask another professional to look at them
Walk away from a deal that does not feel right

There will always be another house. There will not always be another chance to avoid a bad decision.

Why This Matters Specifically for Black Communities

Black households still face higher denial rates, lower overall homeownership, and more cost burdens than many other groups. Yet when Black families do become homeowners, their property values and equity have grown strongly in recent years.

This means:

The system is not perfectly fair, but it is still possible to win in it.
Every informed Black homeowner becomes part of the solution, not just the statistic.
Each successful purchase is a step toward narrowing the wealth gap and increasing stability for future generations.

Fear without information keeps you stuck. Fear plus information and support can lead to wise, powerful decisions.

Final Thoughts from Malcolm Davis

As Malcolm Davis, this is the message: your fear is valid, but it does not have to define your future. You deserve to understand:

What you are signing
What are you paying
What you are building

You deserve professionals who will communicate with you in a clear, respectful manner, without using jargon. You deserve to see homeownership not as a trap, but as a tool that, used wisely, can change the trajectory of your family.

If you are Black and you are nervous about buying a home, that is okay. Start by learning. Ask hard questions. Build a team. Take your time. Then move forward when you are ready—with a clear mind and a solid plan.

Homeownership is not the only path, but it remains one of the strongest ways for Black families to build wealth, stability, and legacy in America. And you are fully entitled to claim your share of that opportunity.