What could lead to a borrower being denied a mortgage application?

A low credit score can lead to a borrower being denied a mortgage application because it is an important indicator of the borrower’s creditworthiness. Lenders assess the risk of lending money to a borrower primarily by reviewing their credit report and credit score, among other factors. A credit score typically reflects how reliably a borrower has managed debt in the past, including their payment history and the amount of debt they carry. A score that falls below the minimum threshold set by the lender indicates that the borrower may not be able to repay the loan, which could result in denial.

In contrast, high income, stable employment, and a good payment history are generally viewed as positive factors that enhance a borrower's chances of loan approval. High income ensures that the borrower has the means to make monthly payments, stable employment suggests reliability and the ability to maintain financial commitments over time, and a good payment history demonstrates responsibility in managing previous debts. These factors contribute significantly to improving a borrower's chances of obtaining a mortgage rather than leading to denial.