I got a preapproval letter but was still denied. Why?

Q: I got a preapproval letter from a lender, but the underwriter denied my application. Why?

A: A preapproval letter is not the same thing as actually being approved for a mortgage.

A preapproval letter is also known as a "conditional commitment” because it’s based upon information you have stated to the lender and a quick review of your credit. The lender is essentially stating that they will consider making you a mortgage loan.

However, further approval is required and will depend on whether or not you can provide proper documentation for your income, assets and more, and especially that the property meets the lender's criteria for type of property, passes inspection and the appraisal verifies its value.

In short, something didn't pass review to the mortgage underwriter's satisfaction, and so you were denied. However, some items may be curable (i.e. with fresh documentation or another appraisal) and some may not be (i.e. your current income doesn’t support the loan amount). You'll need to follow the direction provided in the denial letter and see what can be done to rectify your situation and be approved for the loan in the near future.

To get a handle on the whole preapproval process, you should check out our comprehensive Mortgage Preapproval Guide.

Preapproval Resources

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