When banks deny home purchase loans, borrowers should explore alternative lenders, improve creditworthiness, and negotiate seller assistance. First, consider government-backed programs like FHA loans, which offer lower down payments and relaxed credit requirements. Second, approach community banks or credit unions, which may offer more flexible terms. Third, seek private lenders or crowdfunding platforms for alternative funding. Additionally, revisiting credit reports to address errors and boosting credit scores through timely payments can enhance approval chances. Negotiating with sellers for price reductions or covering closing costs may also bridge financing gaps.

Banks often deny loans due to insufficient income, poor credit scores, or high debt-to-income ratios. For instance, the Consumer Financial Protection Bureau (CFPB) reports that 25% of mortgage applicants were denied in 2022, primarily for credit score issues or documentation gaps. FHA loans, requiring just 3.5% down, approval rates exceed 70%, per Federal Housing Administration (FHA) data, making them a viable alternative for borrowers with moderate credit. Credit unions, which hold 20% of U.S. mortgages, approval rates are 15% higher than conventional lenders, as noted by the National Credit Union Association (NCUA). Seller contributions, averaging $8,000 nationally (National Association of Realtors, 2023), can offset closing costs, increasing affordability. Credit counseling programs, such as those from the CFPB, improve approval rates by 30% within six months, as shown in a 2023 Federal Reserve study. Combining these strategies addresses common rejection triggers and expands borrowing access.