How Do US Laws Protect LGBTQ Homebuyers From Discrimination?

Homeownership in the LGBTQ community has been below the national average but on the rise in the past few years, thanks in part to legalized marriage equality. Even so, this community still struggles with homeownership and housing security.

Fortunately, there are several consumer protection laws in place to help prevent discrimination against people based on their gender identity or sexual orientation. Here’s a closer look at how they work and what LGBTQ homebuyers can do if they believe they’ve been the target of discrimination.

“There are incredibly high levels of housing insecurity experienced by LGBTQ people,” Karen Loewy, senior counsel and seniors strategist for Lambda Legal, told The Balance by phone. She pointed to recent research by the UCLA School of Law’s Williams Institute that breaks down how widespread discrimination has contributed to the issue. “The dramatically decreased incidence of homeownership among LGBTQ people, in part, really stems from exactly this kind of discrimination as a barrier.”

According to Freddie Mac, 46% of all LGBTQ renters said they fear discrimination in the future during the home-buying process. Analysis by Iowa State University researchers also found that the mortgage approval rate for same-sex couples was 3% to 8% lower than for different-sex couples; same-sex couples who were approved for a mortgage also paid more in interest and fees.

But the legal framework for protecting LGBTQ homebuyers has been strengthening, particularly with regards to these regulations. U.S. Census data from the 2019 American Community Survey (see table below) shows that, among married and unmarried couples, LGBTQ homeownership is approaching or at parity with total U.S. homeownership.

U.S. Homeownership by Relationship Type

The Fair Housing Act

The Fair Housing Act was enacted in 1968 to prevent lenders, insurance companies, landlords, real estate agents, and other entities involved in housing from discriminating on the basis of race or color, religion, sex, national origin, familial status, or disability. However, the act didn’t explicitly include sexual orientation and gender identity under those protections. This loophole meant that homebuyers and renters within the LGBTQ community faced discrimination—with little legal recourse—when attempting to secure a home. 

Such inequity can come in many forms, according to Reid Wakefield, an attorney with law firm Mirick O’Connell in Worcester County, Massachusetts. For instance, home sellers may pull their listings, or refuse to sell to LGBTQ individuals. Realtors may refuse to work with members of the community or steer them toward particular neighborhoods. Getting approved for a home loan or favorable interest rates and terms also can be more difficult for same-sex couples and transgender buyers. Wakefield added that discrimination can also extend into many other services related to homebuying, from language used in advertising, to the appraisal process.

The good news is that federal lawmakers have been focused on updating the rules. “There has been a significant push in recent years for courts and enforcement agencies to interpret federal prohibitions against discrimination on the basis of ‘sex’ to include sexual orientation and gender identity,” Wakefield told The Balance by email.

In February, for instance, the Department of Housing and Urban Development (HUD) announced that LGBTQ Americans will now be protected under the Fair Housing Act. HUD released a memorandum outlining a new executive order by President Biden, which came in response to a recent Supreme Court ruling that sex discrimination in the workplace prohibited under Title VII of the Civil Rights Act of 1964 should extend to and include discrimination on the basis of sexual orientation and gender identity. 

With this ruling in mind, Wakefield said, the Biden administration directed all federal agencies, including HUD, to interpret “sex” to include these categories.

How to File a Complaint Under the Fair Housing Act

Just because discrimination on the basis of sex is prohibited doesn’t mean it still doesn’t happen. Now, however, victims of housing discrimination have legal recourse under the Fair Housing Act.

To file a complaint with HUD's Office of Fair Housing and Equal Opportunity (FHEO), you have a few options:

• Online: The FHEO offers an online portal where you can submit your complaint (also available in Spanish). 
• Email: To submit a complaint via email, download this form and send it to your regional FHEO office.
• Phone: If you’d rather submit a complaint over the phone, contact the FHEO at 1-800-669-9777 or 1-800-877-8339.
• Mail: To mail a complaint, print out this form and send it to your regional FHEO office.

When filing your complaint, it’s important to include as many details as possible. At minimum, you should include your name and address, the name and address of the individual or organization that you’re filing a complaint against, an address or description of the property in question, a description of the incident, and the date it happened.

Once your complaint has been submitted, HUD will appoint investigators to look into your allegations. They may request additional information from you. HUD will also notify the party against whom you’re filing a complaint. Once the investigation is completed, you will receive a written report with the findings.

You have the option to resolve the complaint at any time during the investigation, in which case both parties will sign an agreement and HUD will monitor compliance. Alternatively, it may be necessary for the government to pursue legal action. If this happens, you won’t be responsible for any legal fees or other associated costs.

The Equal Credit Opportunity Act

Another civil rights law that protects consumers from being discriminated against in the financial marketplace is the Equal Credit Opportunity Act (ECOA). This act, which is implemented by Regulation B, prohibits lenders from discriminating against borrowers based on race, color, religion, national origin, sex, marital status, age, participation in a public assistance program, or for exercising their rights under certain consumer protection laws.

Like the Fair Housing Act, the ECOA has been in place for decades, but was only recently interpreted to include LGBTQ individuals in its protections.

For example, Loewy described a case in Boulder, Colorado, where a landlord had turned away as potential tenants her clients—a same-sex couple, one of whom is transgender. “Basically, she told them in an email that their unique relationship was going to jeopardize her standing in the community.” The case, Smith v. Avanti, was one of many that helped the ECOA evolve to be more inclusive. 

This year, the Consumer Financial Protection Bureau (CFPB) also clarified that lenders can’t discriminate against homebuyers based on sexual orientation or gender identity. 

How to File a Complaint Under the ECOA

If you believe you were the victim of an unfair credit transaction, you’ll need to file a complaint with the appropriate regulatory agency. That will depend on what type of institution you have a complaint about:

HUD’s Equal Access Rule

In addition to the federal laws above, LGBTQ homebuyers have protection under HUD’s Equal Access Rule. This rule, originally published in 2012, requires that all consumers have equal access to HUD programs, regardless of their sexual orientation, gender identity, or marital status. Any housing provider that receives HUD funding or has a HUD-insured loan is held to this rule.

How To File a Complaint Under the Equal Access Rule

If you believe you were discriminated against by an organization that falls under the jurisdiction of the Equal Access Rule, you can notify HUD by filing a complaint or by contacting a local FHEO office. To do this, follow the same steps outlined under the Fair Housing Act above, as the process is the same.

State and Local Laws

Aside from these federal rulings, there are also state and local laws that protect against discrimination of LGBTQ individuals in the housing market. “Many states and cities throughout the country have added sexual orientation and/or gender identity as specific protected classes in their housing discrimination laws over the years,” Wakefield said.

But there is room for improvement. “At this point, still less than half of the states have explicit protections that bar discrimination on the basis of sexual orientation and transgender status,” Loewy said. In those that do, regulations cannot contradict or reverse federal laws, only build upon them. “There is an overlay of an additional level of explicit protection,” Loewy said.

The Bottom Line

Housing discrimination remains a major hurdle for prospective LGBTQ homebuyers. Fortunately, there are laws in place to prevent it, and lawmakers continue to push for more-inclusive rules related to sexual orientation and gender identity. 

Anyone who has been the victim of housing discrimination should file a complaint as soon as possible—not only to ensure they’re fairly compensated, but also to hold financial institutions and people in the housing industry accountable.