
Sign up & start saving!
Get our weekly newsletter for the latest in money news, credit card offers + more ways to save
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
Updated
Not only can a rejected application prevent you from getting your ideal home, but it can also stay on your credit file and hurt your chances of having future loan applications approved. So let’s take a look at some common reasons why lenders reject mortgage applications, as well as what you can do to ensure your application is approved.
Each lender imposes its own lending criteria on the mortgages it offers. Lenders will reject applicants who don’t meet the criteria because they pose a higher risk of defaulting on the loan.
Some common reasons why lenders reject loan applications include:
Having your application rejected can be disappointing, but there are plenty of steps you can take to boost your chances of approval next time you apply for a loan.
If the lender doesn’t have enough information to make a decision, or if the information in your file is difficult to verify, your application will be suspended. This just means that the lender needs more supporting documentation.
You should receive a list of additional documentation you need to provide. Once you send it in, your application will proceed. If you’re unable to provide the documentation your lender has asked for, contact them directly to figure out if there’s an alternative.
If you didn’t have a broker in the first place, it might be wise to enlist their help once you get your first rejection. They can work with you to make sure you’re presenting all your information in the best possible light and also help steer you in the direction of a lending institution that you might give you a better chance of getting your loan across the line.
You can also research other lenders yourself and apply with a different lender. Start by finding out why your application was denied, and use that information to find a more suitable lender. For example, if your credit score was too low, look for a lender that specializes in underwriting for buyers with poor credit.
The absolute safest course of action is to wait six months, get your finances in order and reapply. Take some time to pay down existing debts, save a larger down payment and build your credit score before reapplying.
If your mortgage application was denied, it doesn’t mean you’ll never be able to get a house. If your application was denied on a technicality, like if you applied for a condo loan with a lender that doesn’t offer them, you can compare other lenders and reapply with a more suitable option immediately.
But if you’re not financially stable enough to qualify, you may want to take some time to work on your finances before reapplying.
You can now calculate your payroll expenses based on gross income instead of net profit. Here’s how it works.
Here’s where to get financial help for yourself and your business if you’ve been affected by the storm in February 2021.
A poor driving record may result in higher rates on your life insurance, with some insurers turning you away altogether.
Find out how to apply — plus explore alternatives to deferring your payments.
Earn flat rewards on all of your purchases.
Compare 6 lenders to find one that’s a good fit for your needs.
Save money by targeting your coverage to your largest debts.
All lenders are now accepting First Draw and Second Draw loans until March 31st. Here are tips for how to pick a PPP lender.
Is it time to refinance your FHA to a conventional loan?
The PPP wasn’t made with sole proprietors and independent contractors in mind. Here are other options that can help.