When a mortgage application is rejected due to bank statement issues, applicants should first review the lender’s specific feedback to identify the problem. Common issues include unexplained deposits, insufficient reserves, or documentation errors. To address these, applicants should:

1. Verify and clarify discrepancies: Contact the lender to request a detailed breakdown of flagged transactions. For example, recent large deposits without a clear source (e.g., employment or inheritance) may raise concerns about stability.

2. Provide supplementary proof: Submit additional documentation such as pay stubs, tax returns, or gift letters to validate income or asset sources.

3. Rebuild financial credibility: If reserves are low, save additional funds to meet the lender’s required cash reserve threshold, typically 2–6 months of mortgage payments.

4. Consider alternative lenders: If the primary lender cannot accommodate the issue, explore non-traditional lenders or adjust loan terms (e.g., higher down payment or lower loan amount).

This approach addresses underwriting guidelines and mitigates risks perceived by lenders. Data from the 2023 Mortgage Bankers Association (MBA) shows that 40% of mortgage rejections stem from documentation errors or insufficient reserves. A 2022 report by CoreLogic highlighted that applicants with unexplained deposits greater than 50% of their monthly income faced a 65% rejection rate. Proactive resolution of bank statement issues increases approval chances by aligning financial profiles with lender expectations, as 78% of applicants who reapply with corrected documentation succeed (Federal Housing Finance Agency, 2023). Lenders prioritize predictable cash flow and transparency, making these steps critical for overcoming rejection.