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Common Reasons You Can Be Denied for a Loan

When you’re applying for a home, there are several steps to take to secure a loan. If you follow common protocol it is likely that you will be approved and move onto the next step. But, there are other issues that can potentially derail the process and result in a denial. Here are things to look out for that can save you time and stress later on!

Insufficient Down Payment

It can be tough to rearrange your finances and prepare for a down payment. This is especially true if this is your first home or a luxury property. Although any amount of savings is nothing to balk at – you may be surprised to learn that the total you offer can affect the approval process. It is common for a loan to be denied if the down payment is not enough. Lenders want to be assured that you have a significant foundation before you start to pay the principal balance. Keep this in mind when constructing a savings plan!


As tough-love as it sounds: debt is not ideal when you purchase a home or property. Not only does it add unnecessary burden to other aspects of life – lenders are quick to take note of your delinquent accounts. Owning money extends past banks and other financial institutions: debt is debt when it comes to financing a home. If you have borrowed money from friends and family and have it on record – it’s a good idea to address it as soon as possible!

Credit Score

Your credit score, especially your on-time payment history, will affect the decisions of mortgage companies. They want to discern whether you have a trend of responsible spending and repayment before approving a loan. At Minute Mortgage we can help you pull and analyze your credit score so that you’re aware of any road-blocks on your path.  It creates a peace of mind for you and for the lender to know that you are in control of your money across the board. 

Credit History

If you already have established credit, as mentioned above – it’s essential to focus on your score and making sure you repay on time. Surprisingly, there is another credit factor that affects a loan approval: history! Lenders are looking for clients that have a long-standing history of open and active accounts. If you only have one credit card that you barely use, or have never rented an apartment before – this may be a red flag to a mortgage company. It’s preferable to have a few accounts that have been in use for several years. 

Article Summary

4 Minute read

Getting denied for a loan is painful. Here are some common ways people are denied mortgages – and what you can do to help prevent it.

Minute Mortgage