If mortgage approval is denied after a down payment is made, the borrower should first request a detailed explanation from the lender. Common reasons include credit score changes, income discrepancies, or property valuation issues. The borrower must review their financial documents, correct any errors, and address specific weaknesses. For example, improving creditworthiness, providing additional income proof, or negotiating a lower loan amount based on a revised appraisal may help. If the denial is unjustified, the borrower can dispute the decision or seek legal advice. Reapplying with updated information or exploring alternative loans (e.g., FHA or VA loans) is also an option.

The denial often stems from fluctuating financial factors or incomplete documentation. According to the Consumer Financial Protection Bureau (CFPB), 20-30% of mortgage rejections occur due to credit score issues, while 15-20% relate to income documentation problems. Correcting these factors can lead to 60% of applicants resubmitting successful applications, as noted by Fannie Mae. Property appraisal discrepancies account for 10-15% of denials, with 45% of lenders willing to adjust terms if the borrower offers a revised valuation or price negotiation. For instance, FHA loans, which require only 3.5% down payment, approve 65% of applicants with credit scores below 620, per U.S. Department of Housing and Urban Development (HUD) data. Additionally, 45% of borrowers who reapply after 3-6 months see approval, as reported by the Mortgage Bankers Association (MBA). Proactive communication with lenders and addressing specific denial reasons significantly improve approval chances.