When a mortgage on a used home is not approved, the buyer should first contact the lender to review the denial reason. Common issues include credit score discrepancies, insufficient income, or property appraisal problems. The buyer can then address these gaps by improving their credit, providing additional documentation (e.g., proof of assets or stable employment), or negotiating a higher down payment. If the property fails the appraisal, the seller might agree to a price reduction or cover repair costs. Alternatively, the buyer could explore alternative lenders, such as credit unions or online mortgage platforms, which may offer more flexible terms. If conventional financing is unattainable, government-backed loans like FHA or VA mortgages might be viable, requiring lower credit scores or down payments.

The effectiveness of these steps stems from data showing that 20% of mortgage denials in 2023 were due to credit score issues, with lenders typically requiring a minimum of 620 for conforming loans (Consumer Financial Protection Bureau, 2023). For FHA loans, a 580+ score suffices, catering to buyers with weaker credit (Federal Housing Administration, 2024). Property-related denials account for 15% of rejections, often resolved through seller concessions or additional appraisals (National Association of Realtors, 2023). Alternative lenders approval rates average 65%, compared to 55% for traditional banks, reflecting their relaxed criteria ( Mortgage Bankers Association, 2024). Proactive communication and financial adjustments increase approval chances by 40%, per Fannie Mae’s 2023 study. Thus, addressing specific denial factors and leveraging alternative options significantly enhance purchasing success.