You’re driving through your dream neighborhood on the way to see a home for sale, your mind is already flooded with images of a new life. It’s easy to see how shopping for a house is exciting. But it is also stressful, because there’s always the chance that you won’t be approved for a loan. In fact, new research shows that unless you have a high-credit-profile, the chance of being rejected for a mortgage is nearly one in three. This figure is much higher than the Observed Denial Rate of 11%, which doesn’t account for shifts in applicants’ credit profiles.

Data released yesterday by the Urban Institute’s Housing Finance Policy Center (HFPC) presents their latest findings. Their work uses publicly available data and marries is to detailed CoreLogic data to calculate the Real Denial Rate (RDR). Traditionally, the ODR or observed mortgage denial rate is calculated from Home Mortgage Disclosure Act data released by the government. HFPC takes the work a step further by adjusting for applicant credit differences to get a more accurate picture of of who is being approved and denied for mortgages.

The Real Denial Rate is meaningfully higher than the Observed Denial Rate Housing Finance Policy Center

Among their findings is the fact that the RDR jumps to 52% for small-dollar mortgages (those at or below $70,000). At first glance, consumers may think that they’ll be more likely to receive…