Researchers in Iowa State University’s Ivy College of Business analyzed national mortgage data from 1990 to 2015 and found the approval rate for same-sex couples was three to eight percent lower than heterosexual couples. The study also included a smaller, focused dataset with more detail about applicants’ work history and credit worthiness. Based on this dataset, same-sex applicants were 73 percent more likely to be denied than heterosexual couples.

Additionally, the study found that same-sex couples who were approved paid more in interest and fees.  Study co-authors Hua Sun and Lei Gao, associate and assistant professors of finance at teh University, respectively, say the difference in finance fees averaged less than .5 percent, but combined added up as much as $86 million annually.”Lenders can justify higher fees, if there is greater risk,” Gao said. “We found nothing to indicate that’s the case. In fact, our findings weakly suggest same-sex borrowers may perform better.”

The researchers say their findings signal a need to include sexual orientation as a protected class under federal lending laws. The Fair Housing Act and the Equal Credit Opportunity Act currently prohibits discrimination against borrowers on the basis of race, color, religion, sex, or national origin. They prohibit specific types of behavior, such as discouraging applicants of protected classes to apply; rejecting applicants based on those characteristics; and imposing different terms and conditions based on those traits. But, the researchers note, neither law specifically covers sexual orientation

“Policymakers need to guarantee same-sex couples have equal access to credit,” Sun said. “Using our framework, credit monitoring agencies also can take steps to investigate unfair lending practices.”

Sun and Gao used data from the Home Mortgage Disclosure Act, the Federal Reserve Bank of Boston and Fannie Mae Loan Performance to test whether perceived sexual orientation affected mortgage approval, cost and performance. Utilizing these datasets allowed researchers to validate their findings and control for factors such as income, variations in lenders’ underwriting standards and property type, which may influence approval rates.

Co-applicants with the same gender were identified as same-sex couples for the study. Gallup and Census Bureau data of geographic distributions of LGBT adults were used to verify their identification strategy.