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What to Do if Your Home Loan is Denied

Key takeaway

Being turned down for a mortgage doesn’t end your dream of owning a home. There are many reasons a loan application might get a “no” that can be addressed. And in the event of a more-complicated scenario, your lender can check to see if there are alternative paths available.

You’ve taken the early steps to pursue homeownership. As you dive into the homebuying process, you may be surprised to learn that your loan application could be declined by your proposed lender. Although this can be frustrating, it shouldn’t stop you from pursing your goal of owning a home.

As you’ll see in this short video, there are a number of reasons your application for a loan could be declined — and some of them may be things you can address. Your first step toward a solution should be to talk to your proposed lender about why the application wasn’t approved.

And remember, being turned down for a loan doesn’t necessarily mean you can’t get approved for a loan on a different property or for a different amount.


What if you get declined for a loan?

Transcript: What if you get declined for a loan?

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Getting mortgage approval isn't always easy.

Here are some common reasons why people are turned down for loans, and some suggested next steps for each.

Your credit score is too low.

Work on managing your credit.

If you have missed payments, get up-to-date and stay current.

You have too much debt relative to your income. Create a plan and a budget for paying off some debt.

Do not increase your debt.

Your income is too low to support the payments for the loan you requested.

Find a property that is less expensive, or consider a savings plan to increase your down payment amount.

The market value of the property is not sufficient to support the amount you wanted to borrow.

Lower your offering price or find another property.

Your employment history is not long enough.

Find out how long of an employment history is needed, and plan accordingly.

Your lender can work with you to offer alternatives to try to address most issues.

Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A.
© 2014-2022 Wells Fargo Bank, N.A. NMLSR ID 399801.

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