If a bank loan is denied after a down payment is made, the buyer should first contact the seller or real estate agent to explore options like a purchase agreement with a contingency clause. This allows the buyer to recover the down payment if they cannot secure alternative financing within a specified timeframe. The buyer should also investigate alternative lenders such as private mortgage lenders, crowdfunding platforms, or community development organizations. Additionally, revisiting creditworthiness, improving debt-to-income ratios, or seeking co-signers may help qualify for a new loan. Legal counsel is recommended to review the contract terms and ensure compliance with local laws.

Denial after a down payment is common due to stringent underwriting criteria or documentation errors. According to the Consumer Financial Protection Bureau (CFPB), approximately 20% of mortgage applications are denied, often citing credit score issues (e.g., scores below 620) or insufficient income. The Federal Reserve reports that 40% of rejected applicants had errors in loan applications, such as incomplete tax returns or inconsistent employment history. For example, a 2022 Urban Institute study found that 35% of denied borrowers could have reapplying with corrected documentation. Alternative financing options, like private loans averaging 8-12% interest, are viable but require thorough due diligence. Proactive communication with all parties and strategic financial adjustments are critical to mitigating losses and securing a new loan.