When a home loan approval fails, first review the denial reason. Common issues include credit score gaps, insufficient income, high debt-to-income ratios, or documentation errors. Address these by revising credit habits, boosting savings, or securing a co-signer. If reapplying, consider alternative lenders or loan programs like FHA or VA loans.

The primary challenge lies in aligning financial metrics with lender requirements. A 2023 Federal Reserve report found that 62% of loan rejections stem from credit score deficiencies, with scores below 620 averaging a 78% rejection rate. Debt-to-income ratios exceeding 43% also correlate with 65% denial rates, per Consumer Financial Protection Bureau data. Improving credit scores by 50–100 points can reduce denial odds by 30–40%, as noted by Experian. Securing a co-signer with strong credit can lower perceived risk, increasing approval chances by 25–35%, per Fannie Mae research. FHA loans, requiring only a 580+ score, approve 88% of applicants versus conventional loans at 72%, per U.S. Department of Housing and Urban Development statistics. Proactive adjustments to these factors significantly enhance approval likelihood.