Low Credit Score

• Applying for a mortgage loan without knowing your credit history can end with a rejection if you have a low credit score and derogatory information in your recent past. The effects of negative information on your report lessens with time. But if you have recent late payments, judgments and other issues, these can lower your score and affect loan approval. You don't need a perfect rating to qualify for a loan, but your lender will look at your score to see if you meet the minimum -- typically 680 or higher.
  
  

Outstanding Debts

• A low debt-to-income ratio helps when trying to qualify for a mortgage loan. Lenders want to keep home loans affordable to avert payment problems and foreclosure. Approving borrowers for a home loan with a payment that's more than 28 percent of their gross monthly income can increase the risk of default. What's more, a lender may not approve a borrower if he has several debts, such as high credit card payments, expensive auto loans and other loans. Factoring in how much the borrower will pay monthly for the house, monthly debt payments should remain less than 36 percent of gross monthly income. A higher percentage can trigger a mortgage rejection.
  
  

Income and Employment

• A record of at least 24 months of employment and income makes it easier for borrowers to qualify for a mortgage loan. Mortgage lenders want to ensure that an applicant is a hard worker and someone who can maintain employment and pay the home loan. Gaps in employment history during the past two years or less than two years of work experience can stop a mortgage loan approval. Borrowers need to provide evidence of income and employment, such as copies of his most recent tax returns, W-2's or pay stubs from employers.
  
  

Considerations

• Don't let a mortgage rejection stop your plans of owning your own home. A lender may not accept your application now. But with credit improvements, a longer work history and fewer debts, you may qualify for a mortgage loan in the future. Talk to your lender and ask specifically why you were rejected. Listen to your lender's reason, and develop a plan to increase your creditworthiness.