The reasons, ranked
Primary reason on each denial. "Other" and "not applicable" are excluded.
What each reason means, and what to do about it
Debt-to-income ratio
Your monthly debt payments, including the new mortgage, are too large a share of your gross income. Most conventional loans want this under 43–45%; FHA can stretch to 50% with strong compensating factors. Fixes: pay down revolving balances before applying, add a co-borrower's income, or shop lenders with a higher DTI ceiling. Lenders' DTI tolerance varies, and the lender pages on this site show each lender's denial rate by DTI band.
Credit history
Score too low, too many recent inquiries, a recent late payment, or a thin file. Fixes: dispute errors, bring balances under 30% of limits, and wait out recent derogatories. FHA lenders routinely approve scores in the 580–640 range that conventional lenders decline.
Collateral
The property appraised below the purchase price, or has condition issues the lender will not finance. Fixes: renegotiate the price, increase the down payment to cover the gap, or challenge the appraisal with comparable sales.
Incomplete application
The file was closed because documents never arrived. This is the most avoidable reason on the list. Respond to conditions within 48 hours and ask the loan officer for a written checklist up front.
Unverifiable information
The lender could not confirm employment, income, assets or residence. Self-employed borrowers and recent job changers see this most. Bring two years of returns and a year-to-date profit and loss statement to the first meeting.
Insufficient cash
Not enough verified funds for the down payment, closing costs and reserves. Gift funds from family are allowed on most programs but must be documented with a letter and a paper trail.
Employment history
Less than two years in the same line of work, or a gap the lender could not explain. A written explanation and an offer letter often resolve it.
Mortgage insurance denied
Rare. The private mortgage insurer would not cover the loan, usually on a low-down-payment conventional loan with a borderline score. An FHA loan, which insures itself, is the usual route around it.
Who gets denied
Decision denial rate by applicant profile, all lenders, 2025.
By income
By age
By loan purpose
By loan type
Denials by year
| Year | Applications | Denied | Denial rate | Decision denial rate |
|---|---|---|---|---|
| 2023 | 10,062,636 | 2,037,094 | 20.2% | 25.3% |
| 2024 | 10,781,992 | 2,103,462 | 19.5% | 24.3% |
| 2025 | 11,766,671 | 2,115,090 | 18.0% | 22.6% |