Buying a home is one of the biggest financial moves you’ll ever make — and getting approved for the right mortgage is a key part of the process.
Sometimes, though, buyers are surprised when they don’t qualify for a loan on their first try.
The good news? Most of the issues that stop a loan from being approved can be fixed — often with just a little time and planning.
Below, we’ll walk through the most common reasons a home loan is denied and the solutions that can get you back on track.
1. Credit Issues
The Problem:
A low credit score, late payments, collections, or a recent bankruptcy can make it difficult to get approved.
Solution:
Pull your credit report and review it for errors.
Dispute inaccurate information.
Pay down revolving debt (like credit cards) to improve your score.
Avoid opening new accounts or taking on new debt before applying.
💡 Tip: I can connect you with trusted credit repair resources if you need extra help improving your score.
2. Insufficient Income
The Problem:
If your debt-to-income (DTI) ratio is too high or your income can’t be verified, lenders may decline your application.
Solution:
Explore different loan programs that allow higher DTI ratios.
Pay off or consolidate debts to lower your monthly obligations.
Consider adding a co-borrower to boost qualifying income.
3. Employment Concerns
The Problem:
Frequent job changes, a short work history, or being in a probationary period at a new job can make lenders nervous.
Solution:
If possible, wait until you’ve been at your job for at least 30–90 days before applying.
For self-employed buyers, make sure you have two full years of tax returns.
Provide additional documentation to show that your employment is stable.
4. Assets & Reserves
The Problem:
Not enough money for the down payment or closing costs — or deposits that can’t be explained — can stop your loan from closing.
Solution:
Save early and keep funds in one account for at least 60 days.
Document the source of any large deposits or gifts.
Look into low down payment or down payment assistance programs.
5. Property Issues
The Problem:
Sometimes the home itself doesn’t qualify — maybe the appraisal comes in too low, or the property condition doesn’t meet program guidelines.
Solution:
Negotiate with the seller or request a reconsideration of value if the appraisal is low.
Address necessary repairs before closing or use a renovation loan program.
6. Debt & Liabilities
The Problem:
High credit card balances, auto loans, or new debts can raise your DTI and reduce how much you can qualify for.
Solution:
Pay down credit card balances to under 30% of the limit.
Avoid financing large purchases while applying for a mortgage.
I can run scenarios to show which debts to pay off for the biggest impact.
7. Documentation Problems
The Problem:
Missing, incomplete, or inconsistent documents can delay or derail your loan approval.
Solution:
Get organized early.
Provide all requested documents promptly and completely.
Use my detailed checklist to make sure nothing is overlooked.
8. Loan Program Restrictions
The Problem:
You may not meet the guidelines for the specific loan program you applied for (Conventional, FHA, VA, USDA, Jumbo).
Solution:
Work with a broker (like me!) who can shop multiple programs.
Find the loan type that best matches your credit, income, and goals.
9. Other Financial Red Flags
The Problem:
Unpaid taxes, liens, or a history of overdrafts can raise concerns for the lender.
Solution:
Resolve tax debts or set up a payment plan before applying.
Keep your bank account in good standing for several months leading up to your purchase.
Bottom Line: A “No” Today Doesn’t Mean “No” Forever
Getting turned down for a mortgage can feel discouraging — but it’s often just a temporary roadblock.
With the right plan and preparation, you can fix most issues and qualify sooner than you think.
✅ Ready to See Where You Stand?
Let’s take a look at your current situation and create a plan to get you approved.
Click below to schedule a free pre-qualification review:
📅 Schedule Your Free Pre-Qualification
Together, we’ll turn your dream of homeownership into a reality.