7 reasons banks reject mortgage applications, and how to get approved

How to get approved for mortgage
How to get approved for mortgage

We all know it's tougher to get a home loan these days compared with just a few years ago. Banks tightened their credit standards dramatically during the credit crunch, and lenders now accept only 55% of all mortgage applications, according to the latest annual statistics from the Mortgage Bankers Association.

Overall lending by U.S. banks plunged by 7.4% in 2009, the sharpest decline since 1942, based on FDIC data. And so far in 2010, banks have yet to ease lending standards.

So if you're thinking about buying a house or refinancing your current home, it's time to arm yourself with information that will ensure you get a "Yes" from a lender.

Here are seven reasons people get turned down for a mortgage – along with some advice on how to overcome these obstacles.