Why do Mortgage Loans Get Denied?

December 13, 2023 | Posted by: Ron Chan

Why do Mortgage Loans Get Denied Winnipeg

Fear of denial is what keeps people from doing many amazing things. It leads to procrastination of marriage proposals, career advancements, and for the intents and purposes of today’s article - homeownership. 

As someone who wants to get a home loan, you’re online and asking “why do mortgage loans get denied?” so that you may avoid the same fate when you present your case to lenders. Below is a breakdown of the most common reasons for denial along with insight into how a mortgage broker can improve your odds of approval.

5 Common Reasons Mortgage Loans Get Denied and How a Mortgage Broker Can Help 

Not Enough Income

Logically, limited income limits one’s ability to get a home loan. However, sometimes the issue is more in the reporting of income, or lack thereof. Hundreds of other Manitobans in your shoes may not fully understand what can be counted as income when it comes to a home loan. A broker can assist with this more robust (and true) accounting. All of the following count as income towards a mortgage:

  • Salary/Wages
  • Commissions/Bonuses
  • Tips 
  • Self-Employed Income
  • Rental Income
  • Investment Income 
  • Alimony and/or Child Support 
  • Retirement Pension

View more on what counts as income towards a mortgage and how a broker can help.

Inconsistent Job History

Generally, lenders want to see job consistency, with your most recent vocation having lasted for at least two-years (although longer is preferred). However, if recent job changes infer career advancement, such as moving from one company to another into a higher position, then it’s more acceptable. 

Self-employed contractors may be concerned about getting a loan denied due to levels of income that vary with client loads. This challenge is less of one when you work with a broker. For more insight, we have provided reference guides below:

Poor Credit History

This is another obvious block on a home loan application. The good news, is that a mortgage broker can help you repair your credit with debt consolidation and credit improvement services.

Limited Credit History 

You may have consistently paid your credit card bills (etc.) but have not carried debt for extended periods of time. This limited credit history can scare off some lenders as they don’t know how well you will respond to debt management that spans beyond 5-years and longer. It’s unfortunate that some lenders punish young first-time buyers in this way. This is where alternative private lenders come in. They look at the big picture, including your existing assets and income prospects, and not just credit history. A mortgage broker can connect you to reputable private lenders who may be far more likely to approve your loan.

Poorly Organized Documentation

Lastly, a simple and unfortunate lack of organization of documentation required for a mortgage loan can lead to denial. To keep this from happening, lean entirely on a broker to manage the paperwork to ensure that your i’s are dotted and t’s are crossed. Brokers do this for a living, so leave it to them while you focus on finding your dream home with a soon-to-be approved mortgage.


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