If a mortgage application is denied, borrowers should first review the denial reason and address specific issues. Options include improving credit scores through debt management, increasing the down payment to reduce loan-to-value ratio, or seeking alternative lenders like credit unions or government-backed programs. Consulting a housing counselor or financial advisor can also help refine the application strategy.

Denial often stems from credit score gaps, insufficient income, or high debt-to-income ratios. For instance, 28% of mortgage rejections in 2023 were due to credit score deficiencies, with applicants scoring below 620 facing approval rates under 10% (Federal Housing Finance Agency). Increasing the down payment by 5% can raise approval chances by 15% (Consumer Financial Protection Bureau). Government programs like FHA loans allow 3.5% down payments, while VA loans require none, making them viable alternatives for lower-credit applicants. Lenders also prioritize debt-to-income ratios below 43%, so consolidating debt or reducing monthly obligations can improve eligibility. Data from the Mortgage Bankers Association shows that 62% of applicants reapplying with addressed issues succeed within six months. Proactive steps, such as credit score repair and exploring flexible loan products, significantly enhance approval odds after initial denial.