New Research Finds Black Borrowers Largely Excluded From FHA and VA Home Loans in the 1930s and 1940s

A new study from New York University has found that Black borrowers received only a small share of home loans backed by two of the federal government's most important mortgage programs during the 1930s and 1940s. The research highlights how the Federal Housing Administration and the Veterans Administration, both established to expand homeownership, largely left African American families out of the postwar housing boom.

The Scale of the Exclusion

The researchers examined loan-level records from the Federal Housing Administration and the Veterans Administration during the two decades. They found that loans originated to Black borrowers represented a fraction of the total volume, even in regions where Black residents made up a substantial portion of the population. The gap was widest in the South, but exclusion was documented across the country.

Why the Programs Fell Short

Federal underwriting standards at the time relied on neighborhood appraisal practices that rated areas with Black residents as higher risk, a practice known as redlining. Participating private lenders, who issued the loans, were often unwilling to extend mortgages in those neighborhoods. The result was a system that reinforced residential segregation and limited the generational wealth building that followed homeownership for white families.

What the Findings Mean Today

The authors argue that the early patterns shaped lasting inequality in homeownership rates and household wealth. Understanding the origins of those disparities, they say, is essential for evaluating current housing policy. The study adds to a growing body of work on how federal programs, designed to be broadly inclusive, produced unequal outcomes in practice.

• Black borrowers received a small share of FHA and VA loans during the 1930s and 1940s.
• Redlining and biased appraisal practices were key drivers of the exclusion.
• The patterns contributed to long-term gaps in homeownership and wealth.

Earlier reporting from National Hire a Veteran Day coverage has noted how veteran-related programs continue to shape workforce outcomes, while community efforts such as a Sherman brewery fundraiser for local veterans show how local groups respond to gaps in federal support. Veterans affairs, including recognitions like the Nacogdoches VFW Flag Day ceremony, remain central to discussions about service and recognition.