Mortgage denied? Find out why—and what to do next.

Read the denial notice before changing your finances

Find the explanation of the lending decision in your adverse action notice. It should give specific reasons or explain how to request them. If the notice offers reasons on request, make that request within the stated period; Regulation B provides a 60-day window.

A list of factors affecting your credit score is not necessarily the explanation for the denial. For example, a score disclosure can mention credit utilization while the loan decision turns on insufficient qualifying income. Fixing the wrong issue wastes time.

Sources: CFPB: Regulation B, notification requirements

Ask for the fact behind the reason

A denial category points to the problem. The figure or finding behind it tells you what needs to change. Use the relevant question below rather than asking only whether you can try again.

Save the response with your denial notice. You can use the same information for a correction with the current lender or a review elsewhere.

If the reason is credit history

Check the actual entry: which account, which month, whether the information is correct, and whether the account is still overdue. Correct an error with the reporting company and creditor; evaluate an accurate late payment under the loan’s payment-history rules.

Do not assume that every lender treats an isolated old late payment the same as recent repeated missed payments. Those differences are exactly what a useful review should examine.

Sources: CFPB: correcting credit report errors · Fannie Mae: payment history

If the reason is income or too much debt

These are linked problems. The debt-to-income ratio compares the monthly payments the lender counts with the income it can use. It can be too high because the payments are substantial, because some earnings were excluded, or both.

Start with those two figures. If income was omitted for lack of records, supply the records. If the figures are accurate, evaluate a smaller housing payment or a debt-payment change. A different lender is most useful when it has an eligible way to handle the specific limitation.

If the reason is money for closing or the property

A bank balance alone does not establish that all the money is an acceptable source for a down payment. Trace the source of funds with the relevant statements and transfer records. If the available verified funds fall short, the financing plan needs to change.

A low appraisal is a different issue: the home’s value does not support the transaction as planned. Negotiating a lower price can reduce the gap. Changing lenders should not be treated as a guarantee of a higher value.

Sources: Fannie Mae: documenting deposits · CFPB: options after a low appraisal

When is it worth applying with another lender?

Yes, another lender can approve an application the first lender declined. That does not mean the new lender can skip underwriting. The strongest reason to switch is a clear difference in how the new lender can handle the issue—not simply an encouraging conversation.

A denial alone does not tell you how long to wait. A missing document, an incorrect credit entry and an accurate eligibility restriction have different solutions. Reapply when the issue has been corrected or another lender has identified an eligible alternative. If waiting is necessary, ask what will become eligible and when—an arbitrary few months may change nothing.

Sources: CFPB: what to do after a mortgage denial

Already under contract? Deal with the deadline too.

Tell your real estate agent or attorney that the financing has been declined. Review the financing contingency and closing deadline while the loan issue is being assessed. Starting another application does not preserve your contract rights or extend those dates.

For the second review, provide the denial reason, the documents requested by the first lender, and the purchase timeline. That lets the next lender assess both qualification and whether there is time to complete the necessary work.