10 Common Reasons for Home and Condo Loan Rejection

    For anyone planning to buy a house or condo with a mortgage, it can be frustrating when a bank rejects your application, offers a lower loan amount than expected, or requires a co-borrower. These hurdles often make it even harder to own your first home. In this article, we summarize the main reasons why home loan applications get denied – and what you can do about it.

1. High Credit Card Debt

    One of the most common reasons for loan rejection is credit card debt. Financial institutions typically include your outstanding credit card balance when calculating your debt-to-income ratio. If your monthly debt exceeds 40% of your income, the chances of being denied are significantly higher. So before applying for a home loan, consider reducing or clearing your credit card balance.

2. Ongoing Monthly Installments

    Whether it's car payments or installment plans on your credit card, these monthly obligations also count toward your total debt. If your total monthly payments exceed 40% of your income, your loan application may be rejected outright. Even if your debt is lower than that, it could still reduce your borrowing capacity.

3. Acting as a Loan Guarantor

    Being a guarantor isn’t necessarily a problem – unless the person you're backing defaults on their loan. If that happens, it will show up in your credit report and may hurt your chances of securing a loan. The bottom line? Only guarantee loans for people you absolutely trust—or avoid it altogether.

4. No Savings or Emergency Fund

    Some people believe banks always check your savings account, but that’s not entirely true. Most banks only pay close attention to savings if your requested loan amount is high relative to your income. In such cases, having savings or an emergency fund can strengthen your application, showing the bank that you’re financially responsible and better prepared for emergencies.

    For example: If you earn a high income but have zero savings, the bank might see this as a red flag. They expect that someone with a decent salary should be able to save money regularly.
 

5. Issues with Co-Borrowers

    Some banks do not recognize the income of co-borrowers who are not full-time employees. If your co-applicant is a freelancer or self-employed professional without a solid financial record, proper tax documentation, or a registered business, their income may be excluded from the loan assessment.

    Banks tend to favor co-borrowers with stable and reliable careers such as civil servants, state enterprise employees, doctors, or public prosecutors. If your co-borrower works in one of these professions and has little or no debt, the approval process for your home or condo loan will likely be smoother.

6. Your Employer’s Credibility

    Surprisingly, your workplace can also affect your mortgage application. If your employer has a history of late salary payments, fails to submit social security contributions, or doesn’t pay corporate taxes properly, banks may question the reliability of your income.

    In contrast, working for a well-established company with strong financial practices can positively influence your loan application. It demonstrates job stability and improves your financial credibility in the eyes of the bank.

7. Earning Less Than 25,000 THB per Month

    Some banks have recently raised the minimum income threshold for home and condo loans to 25,000 THB per month. This has become a challenge for many potential buyers, especially first-time homeowners.

    Although some financial institutions, like the Government Housing Bank (GH Bank), now allow up to six co-borrowers to boost combined income and improve loan eligibility, many commercial banks still rely heavily on individual repayment capacity rather than just income figures. So even if you fall below the threshold, having a good credit history and manageable debt ratio can still help.

8. The Bank Doesn't Count All of Your Income

    Every bank has its own criteria for calculating income. Some only consider your base salary, while others may include transportation allowances, fuel costs, bonuses, overtime, and meeting allowances—but often only partially or at a reduced percentage.

    This inconsistency can lead to unexpected loan rejections. That’s why it’s crucial to talk to the loan officer in advance to understand exactly what income sources will be counted. Clear communication upfront can save you time and frustration later on.

9. You’re Changing Jobs

    If you've recently switched jobs—or haven’t passed your probation period yet—the bank may see your employment status as unstable or risky. Even frequent job changes, despite consistent income, can raise red flags.

    Banks look for employment stability as a sign of reliable repayment capacity. So, if you’re planning to buy a home or condo, try to wait until your employment situation is more settled before applying.

10. Other Unusual Factors

    In rare cases, banks may reject a loan application for unusual or unclear reasons. For example, some applicants have been told that there’s no valid reason to purchase a property at this time—especially when their workplace appears suspicious, unregistered, or lacks transparency.

    Banks are increasingly cautious due to concerns about money laundering, especially if the condo you're buying is not located near your current residence or place of work.

Source : estopolis.com

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