Your mortgage was denied after pre-approval. What happens now.

This is the worst version of a mortgage denial, because you are usually under contract, you have money at risk, and somebody is waiting on an answer.

First, the practical thing: tell your agent today. Not next week. Your contract almost certainly contains a financing contingency with a deadline, and that deadline is what protects your deposit. It is the single most time-sensitive part of this situation.

Why it happens

A pre-approval and a final approval are not the same event, and the gap between them is where files fall apart.

Something changed. A new car payment. A credit card opened for furniture. A job change, even a better one — especially a move from salary to commission or self-employment. Underwriters re-pull credit and re-verify employment late in the process, and they see what changed.

The documents did not match the conversation. Income described one way in a first meeting reads differently on the actual returns. This is common with bonus, commission, overtime, and self-employment income.

Deposits could not be sourced. Money in your account that cannot be traced to a documented origin usually cannot be used. Cash deposits are the classic version.

The appraisal came in low, or the property had issues. Sometimes the borrower is fine and the house is the problem — condition, permits, or a condo project that does not meet guidelines.

The pre-approval was thinner than it appeared. Some pre-approvals are barely more than a credit pull and a conversation. Others involve a full document review up front. They carry the same name and very different weight.

Ask for the reason in writing

You are entitled to know why. Under federal fair lending rules, a lender must provide a statement of the specific reasons for a denial, or tell you how to request it.

Get it. Not the loan officer's summary over the phone — the actual written reason. Everything you do next depends on knowing whether this was a credit issue, an income calculation, a documentation gap, or the property. Those lead to completely different solutions, and people waste weeks guessing.

Then work out which kind of problem it is

If it was the property — the borrower side may be entirely fine, and the same approval may work on a different house. Sometimes a renovation program addresses condition issues on the same house.

If it was the income calculation — this is the most common one worth a second opinion, particularly for self-employed and commission borrowers. A different program may read the same income differently.

If it was a credit event or a new debt — there may be a defined path and timeline. Knowing it beats guessing at it.

If it was a documentation gap — sometimes it is genuinely fixable with the right paperwork.

Do not do these

Do not apply to five lenders in a panic the same week. Do not move money between accounts to make a balance look better; underwriters follow the trail and unexplained movement makes things worse. Do not pay off or close accounts on advice from someone who has not seen your credit report, because it does not always help and occasionally hurts.

The reframe

A denial from one lender is one company's guidelines applied to one version of your file. That is a real answer and it is worth taking seriously — but it is not a verdict on whether you can buy a house.

The written reason tells you which question to ask next. Start there.