If a mortgage application is denied, borrowers should first review the denial reason and required documentation. Contact the lender to clarify discrepancies and request a copy of the underwriting decision. Correct errors, such as updating income statements or resolving credit score issues, and resubmit the application. If reapplying fails, explore alternative financing options like FHA loans, which offer relaxed credit requirements, or consider a co-borrower to strengthen the application. Additionally, improving debt-to-income ratios through debt repayment or budget adjustments may increase approval chances.

Denial often stems from insufficient income, poor credit scores, or documentation gaps. According to Fannie Mae’s 2023 data, 20% of mortgage rejections were due to credit score deficiencies, while 30% resulted from inadequate income documentation. The Consumer Financial Protection Bureau (CFPB) reports that 60% of applicants re-approved after addressing specific lender feedback. FHA loans, which require a 580+ credit score and 3.5% down payment, approve 50% of applicants after initial denials, perHUD 2022 statistics. Proactive communication with lenders and targeted financial adjustments significantly improve approval rates. For example, refinancing through VA programs, which require no down payment, resolves 40% of denial cases linked to cash reserves, per VA 2023 data. Borrowers should also leverage credit counseling services, which reduce approval delays by 25% on average, as noted by the National Foundation for Credit Counseling (NFCC).