What to do if you're denied a mortgage

Found your dream home but then got denied a mortgage? It can be heartbreaking and demoralizing, but there might be some things you can do, because "no" doesn’t always mean all is lost. 

As Consumer Reports explains, there are ways to reverse that bad news and get you into your new home.

Homeownership can be a valuable long-term investment and wealth-building opportunity for you and future generations. 

But getting your foot in the door—actually buying that first home—can be tricky, especially for certain communities.

Black and Hispanic customers actually get denied home loans almost twice as much as white customers.

If your loan application gets denied, there are things you can do to help save it. But you have to act fast.

If you want to save your loan, you’ll have as little as a day or two between the time your loan officer breaks the bad news to you and the bank sends a formal letter of denial.

Start by asking for a detailed explanation on why you were denied—which, by law, you are entitled to get. 

If you were denied because some information was missing or unverifiable, get it corrected as soon as possible.

By providing a letter explaining anything the lender may not be clear about, such as reasons for gaps in employment, along with supporting documentation, you could salvage your loan application.

If you find you’re hitting dead ends, shopping around for a new mortgage might be your best bet, but do it right away. 

Every time your credit score gets "hard checked," it’ll cost your score several points. 

You’ll have 14 days from the first day the original lender did a "hard check" to shop around for a new mortgage without further hurting your credit score.

If you are looking for a new loan, a lender that participates in a Special Purpose Credit Program might help. 

This program allows the lender to specifically assist disadvantaged borrowers of color, women, people with disabilities, and other underserved groups. 

You can find a bank offering an SPCP near you by visiting the National Fair Housing Alliance’s website.

If you think your loan application was denied because of discrimination, you can file a complaint at the Department of Justice’s housing discrimination tip line.