Denied for a mortgage? What to do next

A mortgage denial is not the end of the road. It usually means your file did not fit one program at one lender. The first step is finding out exactly why.

Common reasons for a denial

• Debt-to-income ratio. Monthly debts too high compared with documented income.
• Credit. Score below the program minimum, recent late payments, or collections.
• Income documentation. Self-employment, commissions or new jobs that do not document the way the program requires.
• The property. Low appraisal, condition issues, or a condo project the lender will not approve.

What to do next

1. Read the written reason the lender gave you. You are entitled to it.
2. Have a broker look at the whole file. Another program or lender may fit as it is.
3. Consider FHA if credit was the issue, or a bank statement loan if documenting income was the issue.
4. If you need time, fix the specific problem: pay down a card, correct a credit report error, or add a co-borrower.
5. Real estate investors who need to close now can look at a short-term bridge loan from My Bridge Loans and refinance later.

Pitfalls to watch for

Questions people ask

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