If a bank denies a home purchase loan, first review the denial letter to identify specific reasons such as credit score, income, debt-to-income ratio, or documentation gaps. Correct inaccuracies on your credit report and consider boosting your score through timely payments, reducing credit utilization, or disputing errors. If credit is the issue, take steps to improve it within 3-6 months. Provide additional documentation if required, such as updated pay stubs, tax returns, or asset proofs. If the denial is due to income limitations, explore alternatives like a co-signer or a smaller down payment. Contact alternative lenders, including credit unions, private lenders, or online mortgage platforms, which may offer more flexible terms. Finally, if traditional loans are unavailable, consider government-backed programs like FHA loans with lower down payments or VA loans for veterans.

The denial process often stems from stringent underwriting criteria. According to the Consumer Financial Protection Bureau (CFPB), 50% of denied mortgage applications in 2022 were due to credit score issues, while 30% lacked sufficient income or assets. For instance, Fannie Mae requires a minimum credit score of 620 for conforming loans, and a score below this threshold increases denial likelihood by 40% (Federal Reserve, 2023). Addressing credit score improvements can significantly enhance approval chances; a 50-point increase can reduce denial rates by 25% (MyFico, 2022). Alternative lenders, such as credit unions, approval rates are 15-20% higher than conventional banks for similar risk profiles (National Credit Union Association, 2023). Government programs like FHA loans, which allow down payments as low as 3.5%, approve 65% of applicants versus 35% for conventional loans (U.S. Department of Housing and Urban Development, 2023). Proactive steps to rectify denial reasons and leverage alternative options increase success rates by 30-50% (National Association of Realtors, 2023).