Getting denied for a mortgage loan can be a stressful experience, especially in today’s competitive real estate market.
While it’s important to make sure your credit is ready for a mortgage before you start the process, it’s a good idea to understand the potential reasons for denial and what you can do to avoid a major setback in your homebuying plans.
How Often Does an Underwriter Deny a Loan?
In 2020, 9.3% of applicants were denied a home-purchase loan, according to data collected under the Home Mortgage Disclosure Act. However, some loan programs have a higher denial rate than others. Here’s how it breaks down.
- Federal Housing Administration loans: 14.1% denial rate.
- Jumbo loans: 11% denial rate.
- Conventional conforming loans: 7.6% denial rate.
- Refinance loans: 13.2% denial rate.
