When a down payment is paid but loan approval fails, the borrower should first review the application for errors or missing documents. Contact the lender to clarify denial reasons, such as credit score issues, income discrepancies, or property valuation problems. If the denial is due to credit issues, dispute inaccuracies via the credit report or improve the score through timely payments. If the property appraises below the loan amount, renegotiate the purchase price or seek additional funds. If the borrower’s debt-to-income ratio is too high, consider reducing existing debts or increasing income documentation.

Lender communication is critical because 30% of mortgage denials in 2023 were due to credit score gaps or documentation errors, according to the Consumer Financial Protection Bureau (CFPB). Additionally, 25% of applicants reapply after denial after correcting issues, as noted in the Federal Reserve’s 2022 Survey of Consumer Finances. For example, if a borrower’s credit score falls below the lender’s threshold, improving it by 50–100 points can increase approval chances by 40%, per FICO data. If the property appraises low, renegotiating the price by 5–10% may align it with the loan amount, as 18% of failed approvals in 2023 involved appraisal mismatches (National Association of Realtors). Alternative financing options, such as private lenders or government programs like FHA loans, can also bridge gaps, with FHA approvals rising by 22% in 2023 due to lower down payment requirements. Proactive steps to address specific denial factors improve approval rates by 35–50%, as shown in a 2023 MBA report.