Insufficient income: Lenders want to be sure borrowers can afford to make the mortgage payments.  Lenders typically look for at least a two-year track record of income, which could hurt those who have changed jobs recently.





Cloudy financial picture: Generally, total debt payments, including the mortgage, cannot exceed 45 to 50 percent of a borrower’s adjusted gross monthly income.  Overtime and bonuses are included only if the borrower has worked for the same employer at least two years, and has a history of receiving them.





Poor credit: Lenders typically reject applicants with FICO scores below 620.





Low appraisal: One of the predominant reasons buyers are turned down for home loans is because the appraisal on the property is too low.  A buyer may think he or she is purchasing a house worth $800,000, but if the appraisal comes in less than that, the lender will not loan the borrower the money.





Property problems: Sometimes issues turn up within a house, like a major repair or safety issue that needs to be addressed, before an application can be approved.





Information mix-ups: Approximately 12 percent of new mortgage applications were denied because of unverifiable information or incomplete credit applications, according to the Federal Financial Institutions Examination Council.

Appraisers are increasingly taking the heat for more transactions being canceled or delayed after more appraisals reportedly are coming through that don’t meet the contract price.



In August, the National Association of REALTORS® reported that 18 percent of real estate professionals saw contracts fall through when lenders rejected loan applications or appraisals came in lower than expected. About 11 percent reported they had a contract canceled in the previous three months because of “low” appraisals.



“When an appraisal comes in low, it puts doubt in the mind of the buyer as to the true value of that property,” Richard Kassouf, the broker-owner of New Hope Realty in Brunswick, Ohio, told Cleveland.com. “And it gives them a crisis that they have to deal with, where they have to come up with more money for the down payment to allow that transaction to be completed. Or they have to negotiate the price down.”



Complaints from home owners filed nationwide about low appraisals are skyrocketing, according to states’ commerce departments.



But appraisers say it’s not their fault. They argue that many people just don’t realize how much home values have dropped since the housing boom. Plus, appraisals have become more challenging due to fewer sales available to use as comparables and the high number of foreclosures bringing down values.



“Appraisers were blamed for the run-up of the market when prices were high, and now they’re being blamed because prices are low,” says Ken Chitester, a spokesman for the Appraisal Institute. “Both can’t be true. Appraisers are doing the same thorough research and thoughtful analysis that they’ve always conducted. So, in short, don’t shoot the messenger.”

In the housing market inhabited by most Americans, prices have fallen 30% or more since the peak in 2007. That's a steeper decline than during the Depression. Some people have had their homes on the market for a year without a single offer.



Almost a quarter of American homeowners owe more on their house than it's worth. Another quarter have less than 20% equity. About half of homeowners couldn't get a mortgage if they applied today, says Paul Dales, senior U.S. economist for Capital Economics.

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On Oct. 1, those higher limits are slated to drop back down again in expensive markets nationwide -- ranging anywhere from $483,000 in counties like Monterey, Calif., to $625,500 in cities like New York and Washington. As a result, about 1.4 million homes will be pushed out of eligibility for lower-rate conforming loans, according to the National Association of Home Builders. Homeowners looking to buy or refinance those properties will instead have to take out "jumbo" mortgages," which require a much larger down payment -- generally 20% to 30%, compared with the typical 10% for conforming loans -- and carry interest rates that are typically half to three-quarters of a percentage point higher.The upshot? More downward pressure on prices in high-end markets. The new loan limits will affect approximately 8% of the total U.S. housing market, according to industry estimates, with particularly significant impact across the Northeast and California, as well as parts of Florida and Illinois. (You can find local market specifics at fhfa.gov.) But everyone should take heed: If expensive homes stop selling, then prices for the houses under them will feel the pressure too.