Few things hurt as much as being turned down for a mortgage but I’ve got great news. There are 3 things you can do that will possibly turn that rejection into “approved”. These are the three things that most people get turned down for:
Turned Down For Low Credit Score
First, you need to get a full copy of your credit report. The company that turned you down is obligated to send you one, so if they didn’t, be sure to ask for it. Most mortgage companies want your credit score to be 620 or higher. However, FHA loans only require 580.
Check your report for errors. Sometimes people with a similar name get confused with you on the report. Write to every bad item on your credit report and ask for proof. They have to reply (in writing) within 30 days or remove the black mark. Some won’t. In that case, follow up in writing and get the bad mark removed.
There may be items you can pay off. For example. let’s say you stiffed the cable company for $60.00 when you moved 3 years ago, try writing to them and asking if they will remove the mark on your credit if you pay all or part of the bill. Be sure to get their commitment in writing.
Turned Down For High Debt To Income Ratio
Check with a few different mortgage companies what debt to income ratio they allow. Many companies are different and you may be able to find one that will accept yours.
Turned Down For Lack Of Down Payment
You can have a downpayment as low as 2.5% on an FHA mortgage. However, if you need more cash for downpayment or closing, check out my article on how to create a downpayment without saving any money. I think you’ll find it helpful and borderline genius. Check it out here.