Mortgage Denied? Find Your Reason, See Your Options
A denial from one lender is a decision under that lender’s rules, not the final word on whether you can buy. Pick the reason closest to yours to see why lenders deny for it, what may still work, and what to send for a second look.
Reviewed by Tanner Cook, NMLS #2090424 · Updated
What reason were you given?
Your denial notice or your loan officer’s explanation should name the reason. If more than one applies, start with the one that came up first.
Denied in underwriting
You had a pre-approval letter and a contract, then underwriting said no. Here’s what usually changed and how to get the file reviewed fast.
See the optionsSelf-employed income
Your business makes money, but your tax returns say otherwise. See how underwriters read self-employed income and which other documents may work.
See the optionsDebt-to-income too high
Your debts looked too large next to your income. The ratio depends on what gets counted and which guideline set is used, and both can change.
See the optionsCredit score too low
Your score was below the lender’s cutoff. That cutoff may be the lender’s own rule, and the score itself may be fixable sooner than you think.
See the optionsBankruptcy or foreclosure
A past credit event is still inside a waiting period. Check how the date was measured and whether another program sees it differently.
See the optionsNew job or recent 1099
You changed jobs, or your employer moved you to 1099, and the lender wants more history. Some programs look at this differently.
See the optionsNo Social Security number
Many lenders simply don’t offer loans to borrowers with an ITIN. That’s a product gap at that lender, not a final answer.
See the optionsNot enough for down payment
The lender said you’re short on funds, or couldn’t verify where your money came from. Both problems can sometimes be solved.
See the optionsAppraisal came in low
The home appraised below the contract price, so the loan no longer fits. There are a few ways to close the gap, and one formal way to challenge the number.
See the optionsCondo not warrantable
Your credit and income were fine, but the condo project failed review. The problem is the building, and some loan types look at it differently.
See the optionsRental income not counted
The rent your properties earn didn’t count, or counted as a loss. How the rent is documented decides what the underwriter can use.
See the optionsLender overlays
Some denials come from a lender’s own stricter rules, not the FHA, VA or Fannie Mae guideline. If that’s your file, another lender may see it differently.
See the options
What to do in the first 48 hours
Get the reason in writing. Ask for the denial (adverse action) notice. Under the Equal Credit Opportunity Act, it must list the specific reasons or explain how to request them.
Freeze your finances. Don’t open new credit, finance furniture, move large sums between accounts, or change jobs while you sort this out. Any of these can make a second look harder.
Check your contract dates. Tell your agent right away, and talk to your agent or attorney about your financing contingency so you know what deadline you’re working against.
Pull your documents together. The denial notice, your pre-approval letter and Loan Estimate, recent pay stubs or tax returns, and recent bank statements cover most second looks.
Get one experienced second look before applying everywhere. A loan officer who knows several guideline sets can tell you whether the reason is fixable and where the file might fit, before you repeat the same application elsewhere.
Don’t let one lender’s no be the last word
Buyers: answer a few questions for a second look. Agents: send the scenario before the deal runs out of time.
Not a commitment to lend. All loans subject to credit approval, verification and underwriting. Cornerstone First Mortgage, LLC NMLS #173855.