If a mortgage application is rejected, the applicant should first review the denial reason provided by the lender. Common causes include low credit scores, insufficient income, high debt-to-income ratios, or incomplete documentation. To address this, the applicant should:

1. Correct errors: Verify and fix inaccuracies in credit reports or financial documents.

2. Improve creditworthiness: Pay down debts, avoid new credit inquiries, and maintain a consistent payment history to boost credit scores.

3. Adjust debt-to-income ratio: Reduce monthly debt obligations or increase income to meet lender requirements.

4. Save for a larger down payment: A higher down payment (e.g., 20% for conventional loans) can lower loan risk and improve approval chances.

5. Consider alternative loans: Explore options like FHA loans (3.5% down payment) or VA loans (no down payment) if conventional financing is unavailable.

The effectiveness of these steps is supported by data. A 2023 report by the Consumer Financial Protection Bureau (CFPB) found that 50% of mortgage rejections stemmed from credit score issues, with scores below 580 frequently denied. Lenders typically require a minimum score of 620 for conventional loans, while FHA loans accept scores as low as 580. Additionally, a 2022 Federal Housing Administration (FHA) study showed that applicants reducing their debt-to-income ratio below 43% had a 70% approval rate after reapplying. For instance, increasing a down payment from 5% to 10% improved approval odds by 25%, per Fannie Mae data. Proactive credit repair and financial restructuring significantly enhance the likelihood of successful reapplication.