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Top 10 Reasons For Denied Mortgage Applications
Here's the top 10 reasons first & second home mortgage applications are denied:
10. Self Employment
- You or you and/or your significant other are self employed. You can still get approved, but you will need to show tax returns as proof of income. Lenders usually like to see two years of income.
9. Big Purchases
- Making large purchases, like an automobile, right after submitting your home mortgage loan application.
- Debt to Income Ratio exceeds the lenders guidelines. In other words, too much debt.
- Applying for credit cards after submitting your home mortgage loan application. Usually, your credit is checked at the time you apply for a home mortgage and also just before your closing.
6. Liens / Judgements
- Liens and judgements are often causes of mortgage loan rejection.
5. Quitting Job
- Getting fired from or quitting your job after you apply. Usually, in addition to verification at the time you apply for a house loan
, a lender will do a verbal verification of employment the day of or day before your anticipated closing.
4. Incomplete Home Mortgage Application
- You do not fill out your home mortgage loan application completely and/or accurately.
- You are not truthful on your application. Always tell the truth about everything on a loan application.
2. Two Year Employment
- Not being employed for at least two years. There are exceptions to this rule, but most of the time lenders like to see you have stability at your current place of work.
1. Poor Credit
- You can meet all the other home mortgage
guidelines listed, but if you have not been responsible with your finances, it will be much more difficult to obtain a home loan. There are bad credit mortgages
or mortgages for people with poor credit, but the interest rates are much higher. For a 30 year fixed mortgage, this can add up to thousands of extra dollars in interest.