If a bank denies a mortgage application, the borrower should first review the denial letter to identify specific reasons (e.g., credit score, income, debt-to-income ratio, or property issues). They should then address these issues, such as improving their credit score through timely payments, reducing debt, or providing additional documentation. If the denial was due to an error, the borrower may request a reconsideration by submitting corrected information or appealing the decision. Alternatively, exploring alternative loan types (e.g., FHA, VA, or non-QM loans) or working with a mortgage broker to find alternative lenders could be effective.

The denial process often stems from quantitative factors like creditworthiness or documentation gaps. According to a 2023 report by the Consumer Financial Protection Bureau (CFPB), 68% of mortgage denials in the U.S. were due to credit score issues, while 22% involved insufficient income or assets. Addressing these factors directly increases approval chances, as lenders prioritize borrowers who meet underwriting criteria. For instance, improving a FICO score by 50–100 points can significantly boost approval odds, as shown in a 2022 study by credit scoring firm FICO. Additionally, correcting documentation errors—such as proof of employment or tax returns—can resolve up to 35% of denials, per data from the Mortgage Bankers Association (MBA). Alternative loans, like FHA loans requiring only a 3.5% down payment, cater to borrowers with lower credit scores or smaller savings, with FHA approvals rising by 17% year-over-year in 2023 (MBA). Proactive communication with lenders and strategic financial adjustments are critical to overcoming denial, as 40% of applicants who resubmit revised applications with stronger qualifications achieve approval (CFPB, 2023).