Mortgage Application Denial

Lenders are required to explain in writing their decision to deny credit and have 30 days from the submission of your completed application to tell you if and why your loan was not approved.

Perhaps your loan application was rejected on the basis of:
A credit bureau report.
The lender's qualifying formula showing that you have insufficient income or too much debt to afford the house you want.

In either of these cases, there are steps you can take to remedy the situation. For instance, if you are refused credit because of a poor credit rating, you are entitled to a free copy of the report from the credit reporting agency. You can then challenge any errors and can also insist that the credit reporting agency include your side of any unresolved credit disputes in its reports.

If your credit history is not accessible, you should start repaying debts to get current. Once you have improved your credit profile, you may be in a better position to apply for a loan. Many lenders have a second level of review for denied loans. You should also consider the following:

Investigate other affordable housing loans:
If you have insufficient funds for closing costs and a down payment, or insufficient income to afford the house you want, you should investigate alternative financing arrangements. Fannie Mae® offers a wide range of loan products for low- to moderate-income borrowers. These affordable loan products allow for a lower down payment, more flexible underwriting ratios, and a nontraditional credit history.

Seek outside home counseling help:
If you have credit problems, seek the help of a nonprofit credit counseling agency. These agencies can help you develop budgets and arrange repayment plans that are acceptable to you and your creditors. Find credit counselors in your area online or call 1-800-7FANNIE (1-800-732-6643).