What to Do if You’re Denied a Mortgage Loan
Getting denied for a mortgage loan can be frustrating and discouraging — but it’s not the end of the road. Many borrowers are approved on a second attempt after taking the right steps. If you've recently been denied a home loan, don’t panic. Let’s walk through what to do next.
Why Mortgage Applications Get Denied
Lenders deny applications for many reasons. Some of the most common include:
- Low credit score – Most lenders require a minimum score, often around 620 or higher for conventional loans. Learn more about credit score requirements.
- High debt-to-income ratio (DTI) – If your monthly debts are too high compared to your income, lenders may view you as a risk. How to calculate your DTI.
- Inconsistent or insufficient income – Self-employed or hourly income can sometimes trigger extra scrutiny.
- Unstable employment history – Lenders prefer at least two years of consistent work in the same field.
- Incomplete application or documentation – Missing paperwork or errors can cause delays or denials.
What to Do After a Mortgage Denial
If your application is denied, here’s a step-by-step plan to get back on track:
- Request a Denial Letter – This letter will explain exactly why you were denied, which is the key to fixing the issue.
- Check Your Credit Report – Look for errors or negative marks. You can request free credit reports from all three bureaus at AnnualCreditReport.com.
- Improve Your Financial Profile – This might mean paying down debt, correcting credit issues, or saving for a larger down payment.
- Work With a Mortgage Broker – A broker can help you find alternative loan programs or lenders who may be more flexible with your situation.
Explore Loan Options That Fit Your Needs
If your initial loan type wasn’t a good fit, there may be alternatives:
- FHA Loans – These government-backed loans allow lower credit scores and smaller down payments. Learn more about FHA loans.
- VA Loans – For veterans and active-duty military, VA loans offer flexible credit requirements and no down payment. Explore VA loan benefits.
- USDA Loans – For qualifying rural areas, USDA loans offer 0% down and low interest rates. See if you qualify for USDA loans.
How I Can Help You Qualify
As a mortgage broker, I work with a wide range of lenders — which means if one says no, another might say yes. I’ll review your situation, identify what went wrong, and help you build a path to qualification. Sometimes, it’s as simple as finding the right loan product for your unique financial profile.
Don’t Give Up on Your Homeownership Goals
Getting denied is just one bump in the road. With the right guidance, many homebuyers are able to reapply and succeed within just a few months. I’m here to help you every step of the way — from improving your application to finding the right lender.
Contact me today for a free consultation and let’s build a new path to homeownership together.