If a mortgage application is denied, the applicant should first review the decision for errors or missing documentation. Contact the lender to request specific reasons for denial and correct inaccuracies. For example, if credit score issues caused the rejection, improving the score through timely payments and reducing debt can help. Alternatively, adjusting the loan amount, term, or down payment may align with the applicant’s financial profile. Exploring alternative lenders or loan types, such as FHA or VA loans, might also increase approval chances. Finally, if the denial is due to insufficient income, gathering additional proof of stable earnings or seeking a co-signer could be necessary.

Data supports these steps. A 2023 study by the Consumer Financial Protection Bureau found that 20% of mortgage denials resulted from procedural errors or incomplete applications. Correcting such issues improved approval rates by 35% within six months. Credit score improvements, as noted by FICO, typically boost approval odds by 50% for scores above 620. For instance, applicants with scores of 640-679 face a 40% approval rate, rising to 70% for scores of 720-850. FHA loans, requiring only a 3.5% down payment, approve 65% of applicants versus 55% for conventional loans. Additionally, the National Association of Realtors reports that 30% of denied borrowers successfully reapply after addressing financial gaps, with 60% securing loans within a year. Lender flexibility also plays a role: 45% of applicants who switched lenders saw approval within three months, per data from the Mortgage Bankers Association. Proactive communication and targeted financial adjustments are critical to overcoming denial.