What to do if your home loan application is denied

When buying a home, having your mortgage application denied is among the many setbacks you don't want to experience.

There are various factors that determine whether you qualify for financing, and issues in any one of these areas can hinder your goal of obtaining a home loan. Much like you get a home inspection to ensure the property you want to buy doesn't have any red flags, lenders vet your creditworthiness. If you recently lost a job, have too much debt, have a low credit score or lack sufficient income, you can be denied for a mortgage.

So what comes next? You have several paths to choose from after your home loan application is denied. You can negotiate with the lender to determine whether you qualify for a lower amount. If this option doesn't work out, find a new lender. Shop around to see where you can get a loan with affordable terms.

In some cases, however, a having your mortgage application denied is a call to action to improve your financial standing. If you're not prepared to take on such a large debt, spend time time raising your credit score, lowering your outstanding debt and improving your income before you apply again.