You've applied for a mortgage, but the lender says you just don't qualify. Can anything be done? You bet! Here's how you can turn a lender's "no" into a "go" toward your dream home.

First, don't take the rejection personally. Even though this is more easily said than done, it might be that the lender is being overly restrictive in underwriting guidelines, or prefers to make only certain types of loans.

The lender's goal is to lend money, but sometimes the lender-borrower fit just doesn't work. Since both parties have a certain amount of time, energy and money wrapped up in this relationship, analyze the situation with the following questions:

1. Ask specifically why the loan is being turned down. Is the problem with you the borrower, or is it the property? If you're weak on loan qualifying, would a larger down payment make a difference? How about if you reduced some of your debt? Would another loan program help you qualify? Asking specific questions can get you specific answers on what needs to be changed and why.

2. If it's been a while since you first applied for the loan, be sure to update the lender on any changes in your financial picture. Perhaps you failed to tell the loan officer about the pay increase that's coming or the bonus you're getting. Pay increases that will be effective within sixty days after closing can often be included in your qualifying income.

   Additionally, make sure the lender knows about any long-term debt you’ve paid off since this could help swing qualifying in your favor.

3. . Ask the lender if he or she could make the loan and hold it "in portfolio" (this means keep it in-house and not sell it to outside investors). This could give you greater qualifying flexibility since the loan may not have to meet strict underwriting guidelines required by outside investors.

4. If the lender says she still can't make the loan, as a last ditch effort, try another lender. You'll have time and money invested in a credit report, appraisal, and other upfront costs, so explore all options with this lender first. It could be that the lender's policies won't allow the flexibility that you need.

Lenders are in the business of lending, and really do want to make loans. They dislike saying "no" even more than the buyer objects to hearing it. But it’s up to the borrower, the agent and the lender to work together as a team to uncover options to successfully navigate the mortgage lending process.

Published: December 11, 2000

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Julie Garton-Good, DREI “The Frugal HomeOwner™” As a syndicated newspaper columnist, author and international speaker, Julie Garton-Good DREI, C-CREC™, is called “America’s Home Affordability Expert”, addressing more than 25,000 persons annually on topics of real estate industry trends and home affordability. She is the author of five real estate books and is the sole two-time recipient of the international "Real Estate Educator of the Year" award from the Real Estate Educators Association. In 1997, The National Association of Realtors® nominated Julie as one of the fifty most influential people in the real estate industry. She shared the list with only three other women.