🧘 First: Don't Panic
A denial from ONE lender doesn't mean you can't get a mortgage. Different lenders have different requirements, risk tolerances, and loan programs. Over 70% of denied applicants get approved by a different lender.
Top 7 Reasons Mortgages Get Denied
Credit Score Too Low
Score below lender minimums (usually 620 for conventional, 580 for FHA)
💡 Quick fixes can boost score 20-50 points in 30 days
Debt-to-Income Ratio Too High
Monthly debts exceed 43-50% of gross income
💡 Pay down credit cards or increase income documentation
Employment/Income Issues
Job change, gaps in employment, or unverifiable income
💡 Wait for stability or find lender with flexible requirements
Property Issues
Appraisal came in low, or property doesn't meet standards
💡 Renegotiate price or find different property
Incomplete Documentation
Missing bank statements, tax returns, or other required docs
💡 Gather complete docs and reapply immediately
Down Payment Source Issues
Can't verify where down payment came from
💡 Provide paper trail or gift letter
Recent Major Purchases
Bought a car or opened credit during the process
💡 Wait and don't make any more changes
📅 Your 7-Day Recovery Plan
Day 1: Get the Facts
Request your Adverse Action Letter
By law, lenders must tell you WHY you were denied. Call and request this letter if you haven't received it.
Pull your credit reports
Get free reports from AnnualCreditReport.com. Look for errors, high balances, or negative items.
Calculate your actual DTI
Add up all monthly debt payments ÷ gross monthly income. Is it over 43%?
Days 2-3: Fix What You Can Quickly
Quick Credit Fixes (Can boost score 20-50 points):
✅ Pay down credit cards
Get utilization under 30% (under 10% is ideal). This can boost your score within days of reporting.
✅ Dispute errors
Wrong balances, accounts that aren't yours, or incorrect late payments. Dispute online for fastest results.
✅ Ask for rapid rescore
Your new lender can request a rapid rescore (24-72 hours) after you pay down balances.
✅ Become an authorized user
Ask a family member with excellent credit to add you to their oldest card.
Days 4-5: Explore Alternative Lenders
Different lenders have different requirements. A denial from one doesn't mean denial from all.
Try a different loan type
Denied for conventional? Try FHA (lower credit requirements). Veteran? Try VA.
Try a credit union
Credit unions often have more flexible underwriting and work with members individually.
Try a mortgage broker
Brokers work with many lenders and can find ones that fit your specific situation.
Try a non-QM lender
For self-employed or non-traditional income, non-QM lenders have more flexibility.
💡 Pro tip: Apply to multiple lenders within 14-45 days. All inquiries count as ONE for credit scoring purposes.
Days 6-7: Reapply with Confidence
Before you reapply, make sure you have:
🔄 Ready to Try Again?
Compare lenders with different requirements. Many specialize in helping denied applicants get approved.
Compare Lenders & Get Pre-Approved →Recovery Plans by Denial Reason
Denied for Low Credit Score
Immediate Actions:
- • Pay credit cards below 30% utilization
- • Dispute any errors on your report
- • Don't close old accounts
- • Ask for rapid rescore with new lender
Alternative Options:
- • FHA loan (accepts 580+ with 3.5% down)
- • FHA loan (accepts 500-579 with 10% down)
- • Manual underwriting lenders
- • Credit union with flexible guidelines
Denied for High DTI
Immediate Actions:
- • Pay off a car loan or credit card
- • Add a co-borrower with income
- • Document additional income sources
- • Buy a less expensive home
Alternative Options:
- • FHA allows up to 57% DTI
- • VA has no strict DTI limit
- • Non-QM lenders (higher rates)
- • Larger down payment to reduce loan
Denied for Employment/Income Issues
If You Changed Jobs:
- • Same industry? May be OK immediately
- • Different industry? Wait 6+ months
- • Get offer letter showing salary
- • Provide explanation letter
If Self-Employed:
- • Bank statement loan programs
- • 1099 income documentation
- • Asset-based lending
- • Non-QM lenders specialize in this
Frequently Asked Questions
Why was my mortgage denied?
The most common reasons are: low credit score (32%), high DTI (25%), employment issues (18%), property problems (12%), and incomplete documentation (8%). Your lender must send you an adverse action letter explaining the specific reason.
Can I apply for a mortgage after being denied?
Yes! You can apply with a different lender immediately. Different lenders have different requirements—one denial doesn't mean all will deny you. However, if the issue is credit or DTI, you may want to address those first.
Does mortgage denial hurt my credit score?
The denial itself doesn't hurt your score—only the hard inquiry from the application (typically 5-10 points). Multiple mortgage inquiries within 14-45 days count as one inquiry, so shopping around quickly won't hurt you.
How long should I wait to reapply?
It depends on the reason. Documentation issues: reapply immediately. Credit issues: 30-90 days while improving score. DTI issues: after paying down debt. Employment gaps: 6-12 months of stable employment.
🏠 Don't Give Up on Your Dream
Over 70% of denied applicants get approved by a different lender. Compare options and find one that works for your situation.
Find a Lender That Says Yes →Related Guides
Michael Thompson
Senior Mortgage Advisor • 15+ Years Experience
Michael specializes in helping denied applicants find alternative paths to homeownership. He's helped thousands recover from mortgage denial.