When a mortgage bank denies approval, borrowers should first review the denial letter to understand specific reasons. Common issues include credit score inaccuracies, insufficient income documentation, or property valuation concerns. Next, request a free credit report from to identify and dispute errors. If credit is the problem, consider credit counseling or paying down debt. For income or documentation gaps, provide updated proof to the lender. If reapplication fails, seek a second opinion from a different lender or broker. Negotiate terms like higher down payments or shorter loan terms. If unfeasible, explore alternatives like a Federal Housing Administration (FHA) loan, which requires lower credit scores and down payments.

Denial often stems from credit score inaccuracies, with 20% of consumers having at least one error on their credit reports (Consumer Financial Protection Bureau, 2022). A FICO score below 580 significantly reduces approval chances, while scores above 740 improve approval rates by 30% (Federal Reserve, 2021). Lenders also prioritize documentation completeness; 40% of denials occur due to missing income or asset verification (Mortgage Bankers Association, 2023). Second-opinion requests increase approval odds by 15-25% (National Association of Realtors, 2022), as different lenders may interpret guidelines differently. FHA loans, requiring only a 580+ score and 3.5% down, approval rates reach 60% compared to conventional loans at 45% (U.S. Department of Housing and Urban Development, 2023). Proactive steps like credit repair and alternative loan options address systemic barriers to homeownership, particularly for marginalized communities where denial rates exceed national averages by 18% (Urban Institute, 2022).