If a mortgage application is rejected, review the denial letter to understand specific reasons. Check your credit report for errors and dispute inaccuracies via the Fair Credit Reporting Act (FCRA). Improve your credit score by paying bills on time, reducing credit utilization, and avoiding new credit inquiries. Consider alternative loans like FHA or VA mortgages, which may offer looser requirements. Reapply after 3-6 months once financials stabilize.

Data supports these steps. The Consumer Financial Protection Bureau (CFPB) reports that 20% of consumers discover errors on their credit reports, which can lower scores by up to 100 points. Disputing inaccuracies typically resolves issues within 30 days, according to the FTC. A 2023 Federal Reserve study found that borrowers with scores above 740 have approval rates of 92%, compared to 58% for scores below 620. FHA loans require a minimum 580 score, while VA loans have no minimum but favor those with scores above 620. Improving scores by 50 points can reduce mortgage rates by 0.25%, saving $50-$100 monthly on a $300,000 loan. Reapplying after 3-6 months aligns with lenders’ typical underwriting cycles, as credit scores and debt-to-income ratios stabilize during this period. Lenders like Fannie Mae and Freddie Mac also update guidelines quarterly, favoring applicants with consistent financial behavior.