A Denial Today Doesn't Mean a Denial Tomorrow
Getting a mortgage denial is discouraging. You imagined yourself in that new home, and now it feels out of reach. But here's the truth: most mortgage denials are fixable. Understanding why you were denied is the first step toward getting approved.
At The Taberne Group, we've helped clients overcome denials and successfully close on homes. Here are the most common reasons applications get rejected — and exactly how to fix each one.
Reason 1: Credit Score Too Low
The Problem
Each loan program has minimum credit score requirements:
How to Fix It
Timeline: 2-6 months
1. Pull your credit report from annualcreditreport.com and identify negative items
2. Dispute errors — Up to 30% of credit reports contain mistakes
3. Pay down credit card balances — Getting below 30% utilization can boost your score 20-50 points
4. Don't close old accounts — Length of credit history matters
5. Become an authorized user on a family member's old, well-managed card
6. Set up automatic payments — One more late payment sets you back months
A rapid rescore through your lender can sometimes reflect positive changes in days rather than months. Ask The Taberne Group about this option.
Reason 2: Debt-to-Income Ratio Too High
The Problem
Your total monthly debts (including the proposed mortgage payment) exceed the maximum DTI for your loan program. Common limits:
How to Fix It
Timeline: 1-6 months
1. Pay off small debts — Eliminating a $200/month car payment immediately improves DTI
2. Increase income — A raise, second job, or documented side income helps
3. Lower your target price — A cheaper home means a smaller mortgage payment
4. Add a co-borrower — A spouse or partner's income can bring your DTI into range
5. Pay down credit cards — Lower balances mean lower minimum payments
6. Switch student loans to income-driven repayment — Can dramatically reduce the payment lenders use
Reason 3: Insufficient Down Payment or Assets
The Problem
You don't have enough money for the down payment, closing costs, and required reserves. Lenders want to see that you can cover:
How to Fix It
Timeline: 3-12 months
1. Explore down payment assistance programs — PHFA (PA) and HMFA (NJ) offer up to $10,000-$15,000
2. Ask about gift funds — Family members can gift you money for the down payment
3. Negotiate seller concessions — The seller can contribute toward your closing costs
4. Choose a lower down payment program — FHA (3.5%), VA (0%), USDA (0%)
5. Save aggressively — Set up automatic transfers to a dedicated savings account
6. Reduce your target price — Less expensive homes require less money down
Reason 4: Employment Issues
The Problem
Lenders want stable, documented income. Common employment-related denials:
How to Fix It
Timeline: 6-24 months (depending on the issue)
1. Stay at your current job through the mortgage process — changing jobs mid-application is risky
2. Document everything — If you changed careers, provide a letter explaining the transition and your qualifications
3. Wait for the 2-year mark — If you recently became self-employed, lenders typically need 2 tax returns
4. If self-employed: Ensure your next tax return shows income consistent with or higher than the previous year
5. Document overtime, bonuses, or commissions with a 2-year history
Reason 5: Property Issues
The Problem
Sometimes it's not you — it's the property. The appraisal or inspection reveals issues:
How to Fix It
Appraisal gap:
Property condition:
Condo issues:
Reason 6: Undisclosed Liabilities
The Problem
Something appeared during underwriting that you didn't disclose:
How to Fix It
Immediately:
1. Be completely honest on your application — lenders verify everything
2. Don't open any new credit or make large purchases during the process
3. Disclose all debts, even ones you think don't matter
4. Provide explanations for any financial anomalies
Reason 7: Large Unexplained Deposits
The Problem
Lenders review your bank statements and flag any deposits that aren't regular payroll:
How to Fix It
1. Document everything — Keep records of the source of all deposits
2. Avoid cash deposits during the mortgage process
3. Be prepared to explain any non-payroll deposit over $200-$500
4. Transfer gift funds properly — With a gift letter and paper trail (see our gift funds article)
What to Do Right After a Denial
Step 1: Get the Reason in Writing
Your lender is legally required to provide an Adverse Action Notice explaining why you were denied. Review it carefully.
Step 2: Don't Panic
Most denial reasons are fixable within 3-12 months. A denial doesn't permanently damage your mortgage prospects.
Step 3: Get Expert Guidance
The Taberne Group provides free denial consultations. We review the denial reason, assess your situation, and create a specific action plan with timelines to get you approved.
Step 4: Follow the Plan
Implement the fixes consistently. Check in with your lender periodically to track progress.
Get Back on Track with The Taberne Group
A denial from another lender doesn't mean we'll deny you. Different lenders have different programs, overlays, and expertise levels. The Taberne Group at Movement Mortgage has a wide range of loan products and extensive experience working with challenging files. Call us at (215) 266-0663 or start your application at movement.com. We'll review your situation, explain your options, and help you get from denied to approved. We serve homebuyers across Pennsylvania and New Jersey.