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Key takeaway

Being turned down for a mortgage doesn’t end your dream of owning a home. There are many reasons a loan application might get a “no” that can be addressed. And in the event of a more-complicated scenario, your lender can check to see if there are alternative paths available.

You’ve taken the early steps to pursue homeownership. As you dive into the homebuying process, you may be surprised to learn that your loan application could be declined by your proposed lender. Although this can be frustrating, it shouldn’t stop you from pursing your goal of owning a home.

As you’ll see in this short video, there are a number of reasons your application for a loan could be declined — and some of them may be things you can address. Your first step toward a solution should be to talk to your proposed lender about why the application wasn’t approved.

And remember, being turned down for a loan doesn’t necessarily mean you can’t get approved for a loan on a different property or for a different amount!

What if you get declined for a loan?

Video Transcript

[Theme music]

[your Home Matters<sup>SM</sup> Minute logo and Wells Fargo logo on screen]

[Video title text: What if you get declined for a loan?]

Getting mortgage approval isn’t always easy.

Here are some common reasons why people are turned down for loans and some suggested next steps for each.

[Headline says Common reasons for being declined; icon of person on left; bar graph with text below it saying Credit score labeled with a low point of 350 and a top point of 850; subhead to the right of the graph says Low credit score with a check box bullet list that says:

  • Manage your credit
  • Get up to date with payments]

Your credit score is too low. Work on managing your credit. If you have missed payments, get up to date and stay current.

[Headline says Common reasons for being declined; icon of person on left; pie chart with sections labeled Debt and Income; subhead to the right of the graph says Too much debt with a check box bullet list that says:

  • Create a plan to pay off debt
  • Do not increase your debt]

You have too much debt relative to your income. Create a plan and a budget for paying off some debt. Do not increase your debt.

[Headline says Common reasons for being declined; icons of a person and a dollar bill; subhead to the right of the icons says Income too low for requested loan with a check box bullet list that says:

  • Find a less expensive property
  • Set up a savings plan for your down payment]

Your income is too low to support the payments for the loan you requested. Find a property that is less expensive, or consider a savings plan to increase your down payment amount.

[Headline says Common reasons for being declined; icons of a person and a house; subhead to the right of the icons says Market value of property too low to support loan with a check box bullet list that says:

  • Lower your offering price
  • Find another property]

The market value of the property is not sufficient to support the amount you wanted to borrow. Lower your offering price or find another property.

[Headline says Common reasons for being declined; icons of a person and a piece of paper; subhead to the right of the icons says Employment history is not long enough with a check box bullet list that says:

  • Find out how long of an employment history you need]

Your employment history is not long enough. Find out how long of an employment history is needed and plan accordingly.

Your lender can work with you to offer alternatives to try to address most issues.

[Theme music with Wells Fargo logo]

[Text on screen: Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A.
© 2014 Wells Fargo Bank, N.A. All rights reserved. NMLSR ID 399801. Equal Housing Lender.]

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