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Reasons A Loan May Not
Be Approved

There are several common reasons why lenders deny a loan application.

Poor Credit Report - A negative credit report generally indicates that the homebuyer has not established a good credit history. Your first step should be to verify that the credit information issued to the lender is accurate. Ask to see a copy of your credit report that the lender received, or obtain a copy of your credit report yourself from your local credit bureau. Depending on your situation, rebuilding your credit may only delay your home purchase for a short time.

Not Enough Income - Your ability to pay off a loan is reflected in your current earnings and your future income potential. Lenders may decline a loan if the homebuyer does not meet the income requirements or cannot show proof of stable income. It is to your advantage to establish a consistent and stable income.

Too Much Debt - If your existing debts (credit cards, car loans, student loans) exceed the debt-to-income ratio for the loan, determine if you can pay off some of your debts before you apply for a mortgage. If you have credit cards you don't use, cancel them. Inactive credit cards are still considered potential debt.