If a mortgage lender denies your loan, first review the denial letter to identify specific reasons. Common issues include credit score deficiencies, insufficient income, high debt-to-income ratios, or documentation gaps. Request a free credit report from all three bureaus (Equifax, Experian, TransUnion) to check for errors and address them. Reapply with updated financials, such as recent pay stubs, tax returns, or asset statements, to strengthen your case. If the denial was due to credit issues, consider credit repair or secured loans. If the lender’s decision seems unreasonable, appeal the decision in writing within 120 days. Explore alternative lenders like credit unions, online mortgage companies, or government-backed programs (e.g., FHA loans) that may offer more flexibility.

Denial often stems from credit inaccuracies or financial instability. According to the Consumer Financial Protection Bureau (CFPB), approximately 50% of consumers who apply for mortgages receive denials, with credit score issues cited as a primary factor in 30% of cases. A 2023 Federal Reserve report found that 25% of applicants with credit scores below 620 were denied, compared to 5% with scores above 720. Addressing these gaps through credit counseling or debt management can improve approval chances. Alternative lenders, such as Quicken Loans and LendingTree, reported approval rates of 60-70% for borrowers with lower scores, per 2023 industry data, by offering lenient underwriting criteria. Government programs like FHA loans require only a 580+ score and 3.5% down payment, making them accessible to marginal credit profiles. Legal recourse under the Equal Credit Opportunity Act (ECOA) is rare but possible if discrimination is suspected, though evidence is often required. Proactive communication and documentation are critical to overcoming denials efficiently.