When a mortgage loan application is rejected, the first step is to review the denial letter to identify specific reasons. Common issues include credit score deficiencies, insufficient income, high debt-to-income ratios, or documentation gaps. Address these problems by correcting errors in credit reports, increasing savings, reducing debt, or providing additional financial proof. Reapplying with a stronger financial profile or exploring alternative lenders like credit unions or community banks may improve approval chances.

Rejection often stems from creditworthiness (FICO scores below 620) or debt-to-income ratios exceeding 43%, as per the Consumer Financial Protection Bureau (CFPB). Data from 2022 shows 58% of rejected applicants had credit score issues, while 45% failed debt-to-income thresholds. Lenders also prioritize documentation completeness; incomplete tax returns or pay stubs contribute to 30% of rejections. Correcting these factors can boost approval rates, as 62% of applicants reapplying after addressing key issues see success within six months, according to the Mortgage Bankers Association. Alternative lenders may offer more flexible terms, with 27% of applicants turning to these sources post-rejection for better terms. Proactive steps to strengthen financials and seek diverse lending options are critical to overcoming mortgage rejections.