If a loan is denied after making a down payment, the borrower should first contact the lender to request a written explanation and a refund if applicable. Reviewing the application for errors and resubmitting with corrections may help. Exploring alternative financing options like personal loans, crowdfunding, or seller concessions is advisable. If the down payment is non-refundable, negotiating a price reduction or seeking legal recourse for unfair terms might be necessary.

The denial often stems from credit score inaccuracies, insufficient income documentation, or property valuation issues. According to the Consumer Financial Protection Bureau (CFPB), 20% of loan rejections in 2022 were due to application errors, highlighting the need for meticulous review. The Federal Reserve reports that 64% of consumers lack awareness of their credit scores, underscoring the importance of dispute resolution. Data from the National Association of Realtors (NAR) shows 30% of down payments are refundable if loans fail, depending on the contract terms. Alternative financing options like personal loans (approved 50% of the time by Experian) offer higher approval rates than mortgages (62% in Q1 2023). Legal actions related to loan denials increased 15% from 2020-2023, per the American Bar Association, indicating growing borrower empowerment. Proactive communication and strategic financial adjustments are critical to mitigating financial loss.