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  • Writer's pictureRebecca Richardson - Mortgage Consultant

What Do You Do When A Lender Tells You No?

There’s actually a silver lining when a lender tells you ‘no’ when you apply for a mortgage.

If a lender can’t approve you, they’re required to tell you why. Specifically, they have to send you something called an adverse action letter which lists out the reasons behind why you weren’t approved for a mortgage.

You can use that information to develop a plan that puts you in a position to buy a home.

And if your mortgage application is denied, you should also consider asking if it’s based on a guideline or an overlay.

Each loan program has a set of rules and guidelines they need to follow when approving a loan.

For example, the minimum credit score for an FHA loan with 3.5% down is 580.

But lenders can add an extra layer of rules on top of that, called overlays.

For example, maybe they require a 620 credit score to qualify for an FHA loan.

If you’re denied because of an overlay, you can consider applying with a different lender with different additional rules that govern the loan.

But if it’s a guideline, you probably should consider another loan type or taking the necessary steps to address why you were denied in the first place.

If you’re ready to learn more about your personal mortgage journey, based on your unique situation and preferences, you can send me an email here: (

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