I still remember the frustration in my client’s voice.
They had found the perfect house just outside of Atlanta. No other offers were on the table — full price, clean terms. It should’ve been accepted immediately. Instead, the listing agent questioned whether my client actually had the money. When I assured her he was pre-approved, she warned that if they received a conventional offer, the sellers would likely choose it — even if the terms were less favorable — because conventional buyers usually had more money.
This wasn’t about creditworthiness or ability to pay. It was about how he was paying. And it happened to many of my clients in Georgia. But it’s not unique to Georgia.
Across the country, renters and buyers are being denied access to housing and homeownership not because they can’t afford it, but because of what I refer to as the source of their funds. And although some states now protect against source-of-income discrimination, those laws often stop at renters, leaving out homebuyers entirely.
Renters using housing vouchers and buyers using government-backed loans share something significant in common: They are disproportionately people of color and/or low-to-moderate income — the very groups these programs are meant to support.
So why is it legal to reject them? In addition to federal loan programs, many states and cities offer down payment or closing-cost assistance to buyers historically excluded from wealth-building. But automated underwriting systems often decline borrowers using these programs — even when the same borrower would be approved without the assistance.
That’s not logic. It’s stigma built into an algorithm. And it gets worse.
Buyers receiving gift funds from family — often wealthier, often white — face no such scrutiny. Programs meant to close the wealth gap are treated like liabilities, while generational wealth is accepted without question.
It’s a double injustice. First, these borrowers have to qualify for programs by proving the impact of systemic discrimination. Then they are punished for needing the programs — unnecessarily slowed down, burdened with extra paperwork and treated like a risk.
Even more troubling is how this dynamic plays out with independent contractors. Borrowers making 1099 income — typically entrepreneurs, gig workers and self-employed professionals — routinely face higher barriers to financing, despite having incomes comparable or even higher than W-2 earners.
Once again, people of color, immigrants and working-class communities — those disproportionately steered into 1099 work — are further punished for the impact of discrimination with the systemic obstacles that come with accepting “help.”
This is not just a policy gap — it is a fair housing failure.
These programs are touted as progress, but without legal protections in place, they amount to little more than empty gestures. If you can legally reject someone for using a program designed to level the playing field, we haven’t leveled anything at all.
This is where a source of funds protection becomes critical.
It would extend fair housing rights to include buyers — not just renters. It would prevent blanket rejections of viable, vetted financing sources. It would acknowledge that “neutral” policies and systems often have discriminatory impacts. And it would help close the gap between what’s legal and what’s ethical.
Currently, no state’s source-of-income laws protect against rejecting a buyer based on how they’re financing their home — whether that’s through a VA loan, a first-time homebuyer program, a public sector grant or alternative income like 1099 wages.
And while states can lead, this needs to be a federal protection. Especially since many of these programs are federally backed and funded. If the federal government is serious about creating equity, it must enforce it — not just offer it and walk away.
This is a moral issue — and an economic one.
Denying someone housing or homeownership because of how they pay destabilizes families, interrupts generational wealth and even shortens lives. That’s not theoretical — it’s measurable. And in a time where advocating for equity is under attack, it’s even more urgent that we prioritize housing justice. We can’t continue to normalize its harm while we wait for the political climate to shift.
Protecting source of funds would strengthen real estate markets by expanding the buyer pool, increasing market competition, and stimulating long-term community growth. Offers would be evaluated based on actual numbers — not bias against the path someone took to get there.
Let’s be clear: when sellers or agents reject a type of financing, they are often rejecting the buyer themselves — usually someone already protected by fair housing law. But because the rejection is framed around the funding, the discrimination goes unchecked.
It’s time to close the loopholes. This isn’t about charity. This is about establishing fairness in fair housing.
Dominique Lamb is Owner and Principal Broker, The Haven Firm, LLC and founder and principal consultant at the Kirby Institute of Wealth & Real Estate.
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