If unable to secure a mortgage, focus on boosting credit scores, exploring alternative financing, and leveraging down payment assistance programs. Prioritize paying down debts to raise creditworthiness, investigate government-backed loans like FHA or VA options, and seek community grants or shared equity programs.

The primary challenge for homebuyers denied loans often stems from insufficient creditworthiness or low savings. A 2023 Federal Reserve report found that 40% of applicants with credit scores below 580 are rejected, compared to just 5% for scores above 740. Improving credit scores can increase approval chances by 30-40%, as lenders prioritize borrowers with lower debt-to-income ratios and payment histories. For example, FHA loans require a minimum 580 score, while VA loans have no minimum but favor higher scores for better terms.

Alternative financing options, such as community land trusts or seller financing, address gaps in traditional lending. A 2022 U.S. Department of Housing and Urban Development study noted that 12% of homebuyers used seller financing, often with lower interest rates than conventional loans. Down payment assistance programs, including state-specific grants and tax credits, can cover up to 100% of closing costs. The Consumer Financial Protection Bureau reports that 30% of first-time buyers relied on down payment help in 2023, with programs like the chenoa fund offering up to $30,000 for eligible applicants. Combining these strategies increases accessibility, particularly in markets with median home prices exceeding $450,000, where 65% of buyers require down payment aid according to the National Association of Realtors.