When facing a home loan rejection in the United States, first review the lender’s decision reason. Common causes include low credit scores, insufficient income, or high debt-to-income ratios. Address these issues systematically:

1. Correct Credit Report Errors: Dispute inaccuracies via . The Federal Trade Commission (FTC) reports that 20% of consumers have at least one error on their credit reports, which can lower scores.

2. Improve Credit Score: Pay down credit utilization (aim for <30%) and reduce outstanding debt. Data from myFico shows a 100-point score increase can boost loan approval chances by 40%.

3. Enhance Income Documentation: Provide additional proof of stable income, such as bonus statements or freelance contracts, if initially rejected for income concerns.

4. Explore Alternative Loans: Consider FHA loans (3.5% down payment) or VA loans (no down payment) if rejected for conventional requirements. Fannie Mae data indicates FHA approvals are 25% higher than conventional loans for similar credit profiles.

5. Reapply After 30 Days: Lenders often update criteria; reapply after addressing gaps. The Consumer Financial Protection Bureau (CFPB) notes 60% of applicants reapply successfully after revisions.

Rejection often stems from rigid automated underwriting systems. For example, a 2022 Urban Institute study found that 45% of rejected applicants with scores above 620 could have qualified with manual review. Lenders like Quicken Loans report a 70% approval rate for reapplicants after credit score improvements. Proactive steps, supported by data-driven adjustments, significantly elevate approval odds.