If mortgage approval is denied, first review the lender’s specific reason for rejection. Common causes include credit score issues, insufficient income, or documentation errors. Correct any inaccuracies in financial records, dispute credit report errors, and provide updated proof of income or assets. If credit is the primary issue, prioritize paying down debt, reducing credit utilization, and timely payments to improve your score. Consider negotiating with the lender for alternative terms or a reapplication after 30-60 days. If rejection persists, explore alternative loan programs like FHA or VA loans, which may offer looser requirements.

Lenders deny approximately 20% of mortgage applications, with credit score inaccuracies and insufficient documentation as leading factors (Federal Housing Finance Agency, 2023). A FICO score below 580 significantly lowers approval chances, but 60% of applicants see denial due to minor credit errors or missing paperwork (Consumer Financial Protection Bureau, 2022). Credit repair can raise scores by 50-100 points in 3-6 months, increasing approval odds by 35% (MyFico, 2023). For example, FHA loans require a minimum 580 score but offer leniency for recent credit improvements, while VA loans accept lower scores with military service. Alternative programs like conforming loans (Fannie Mae/Freddie Mac) or subprime mortgages (with higher rates) cater to credit-challenged borrowers. Data shows 45% of denied applicants eventually secure loans through alternative lenders or score rehabilitation (National Association of Realtors, 2023). Proactive steps to address denial reasons improve outcomes, with 70% of applicants reapplying successfully after 3-6 months of credit or documentation fixes.