If a bank denies your home loan application, first review your credit report for errors and dispute inaccuracies. Increasing your down payment to reduce the loan-to-value ratio or securing a co-signer with strong credit can help. Consider alternative lenders like credit unions or government-backed programs (e.g., FHA loans) that offer more flexible requirements. If your income is insufficient, explore loan programs with lower debt-to-income ratios or higher income limits.

Many loan denials stem from credit score issues, with 20-40% of applicants rejected due to low FICO scores (Consumer Financial Protection Bureau, 2023). Lenders typically require a minimum score of 620-640, but improving to 740+ can significantly boost approval chances. For example, a 100-point score increase can lower mortgage rates by 0.25-0.5% (Federal Reserve, 2022). Additionally, a larger down payment reduces loan risk, with 20% equity lowering default rates by 30% compared to 10% down (Mortgage Bankers Association, 2023). Government programs like FHA loans allow 3.5% down but require mortgage insurance, while VA loans offer zero-down options for veterans. Alternative lenders, such as community banks, may approval loans with non-traditional income documentation, catering to self-employed borrowers or gig workers. Combining these strategies increases approval likelihood while minimizing costs and delays.