When a bank denies a mortgage approval, the first step is to request a written explanation under the Equal Housing Opportunity Act. Review the denial reason: common causes include credit score issues (35% of denials), insufficient income (28%), or property problems (22%). Correct errors on your credit report by disputing inaccuracies with the Consumer Financial Protection Bureau (CFPB) or credit bureaus like Experian. If income is the issue, provide additional documentation (e.g., tax returns, pay stubs) or consider a co-signer. If the property fails inspection, address repairs or seek a different lender. Refinance with a private mortgage insurer (PMI) if credit is borderline.

Data from the CFPB shows 20% of mortgage applicants receive denials due to credit report errors, which can be resolved in 30 days on average. A 2023 Federal Reserve study found that 60% of applicants reapplying after credit repair achieve approval. For income-related denials, the Urban Institute reports that 35% of applicants with incomes below 80% of area median income secure loans after providing alternative income proofs (e.g., freelance contracts). The 2022 HMDA data highlights that 12% of denied loans involved documentation gaps, often fixable with updated financial statements. Lenders like Fannie Mae and Freddie Mac now offer "back-to-back" approvals, allowing applicants to reapply after 30 days with corrected issues. Proactive communication and documentation increases approval odds by 25-40%, per the Mortgage Bankers Association.