Hello neighbors,

Even though the real estate market is starting to look more and more appealing everyday with factors such as record low mortgage rates and affordable home prices, those in the market to buy a home still have one major concern. That one concern is, getting approved for a home loan. In today's economy lenders are tightening up on their lending standards. Here are the top 7 reasons you or someone you know may get denied for a home loan.

Poor Credit:

Even though a buyer may have a pretty hefty down payment or good equity built up in their home, if their credit score is not too appealing the chances of obtaining a new home loan or refinance from traditional banks are not too great. Lenders are starting to look for above average credit scores.

Insufficient Liquidity:

Banks are not too keen with taking risk on buyers who do not have a down payment of at least 20%-30% and strong excess liquidity.

Lack of Income:

One may think because he or she has a sufficient down payment (20%-30%), a great deal of equity in their home, and a great credit score that the process of obtaining a loan will be a breeze, think again. Banks want to see at least 2 to 5 years of consistent proof of income. This factor may be somewhat challenging for retired borrowers.

Lying on the Application:

As the old saying goes, lying will get you nowhere and lenders are firm believers in this saying. If you've decided to stretch the truth on your application you've basically decided you don't want to be approved. A few words of wisdom, tell the truth.

Debt:

As with many things, debt is not necessarily a good look. If the borrowers debt to income ratio is not too appealing, the chances of being approved are pretty slim.

Unemployment:

As we mentioned in reason number 3, lenders are looking for at least 2 to 5 years of consecutive work history.

Self Employment:

Although entrepreneurship can be consider a good thing and great accomplishment, lenders are becoming reluctant in approving home loans to borrowers that are self employed.

Although many may think lenders are almost making it impossible for the average borrower to obtain a home loan, one way to look at these changing standards is to remember that this will only better the housing market in the long run.