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Mortgage Application Denied? Here’s Why

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Buy a Home

We can help custom tailor your loan program, price range, and even direct you to the right Realtor® in your area.

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Buy a Home

We can help custom tailor your loan program, price range, and even direct you to the right Realtor® in your area.

Get Started

At AdvantageFirst Lending, we’ve created a process that helps potential homeowners receive the mortgage approval they desire. There are, however, instances where an application is unfortunately denied by a lender. Even though standards have relaxed a bit, denial is still a possibility if certain criteria aren’t met. Here are some reasons why.

DTI
Debt-to-income ratio, or DTI, compares a buyer’s personal finance measure as a percentage of gross monthly income. This is how most mortgage lenders determine a buyer’s ability to manage or repay debt. To get a DTI percentage, simply divide the recurring monthly debt x  gross monthly income. This should be less than 45%–Anything higher is grounds for a denial.

Credit History
Your credit history follows you…literally. Mortgage lenders will look for a few things: 1) Length of credit history, 2) Length of open lines of credit, and 3) Credit score, of course. All three play a factor in your approval or denial, and subsequently, your mortgage rate. A good lender will create a plan to help potential buyers work through credit issues.

Most mortgage lenders, require an average credit score of 686 with 580 being the lowest. AdvantageFirst Lending can go as low as 500. Give us a call today at 949-356-6400.

There are certainly other reasons for denial including a home being overpriced (which requires an appraisal) or inadequate employment history. Whatever the reason, knowing your DTI and credit history will keep you ahead of the game when it’s time to purchase your dream home.

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