A few years ago, it seemed like anyone could sashay into a bank and get instant approval for a home loan. Such is not the case anymore; according to the latest annual statistics from the Mortgage Bankers Association, only 55% of loan applications are being accepted these days. In 2009, overall lending dropped by 7.4% (the greatest decrease since the early 1940s) – and in the first half of 2010, we haven’t seen much improvement.

But don’t be disheartened; if you are trying to refinance your home or purchase a new one, it’s still possible to get approved for a new mortgage. Sometimes the best way to get what you want if to know how not to get it. So instead of looking at the positive attributes that lending banks want to see, let’s go over some of the top deal breakers in the mortgage market.

You’re buying the wrong type of property

I know – it doesn’t seem fair for banks to discriminate based on what you’re buying. But they do. In particular, they are still a little shy of backing second home purchases and investment properties. If you’re buying a condo that’s still in its early selling phase, you’re likely to get a good deal – but good luck finding a lender, as banks tend to stay away from new developments that are less than 70% sold. None of this means it’s impossible to get a loan for these types of properties, but you should expect more stringent terms, like bigger down payments and more cash reserve requirements.

You can’t prove your income

Here’s something a lot of people don’t expect when they apply for a loan: you can have a perfect FICO score and a significant pile of greenbacks in the bank, but if you can’t prove your income history and back it up with tax documentation, you have a very slim chance of making your loan happen. Lenders like to see a verifiable history of at least 2 years in the same industry, with as little job hopping and downtime between employment as possible. Banks want to not only see that you have a good credit score and some cash reserves, but that all the information about you says that you can still be reliable if something were to go wrong. A solid, proven income/employment history can frequently be your greatest asset in a mortgage application.

You got screwed by a bad appraisal

Back in the real estate free-for-all days between 2004 and 2007, home values were pretty high. Some of this was attributed by critics to overly-generous – and possibly inaccurate – appraisals. In May 2009, a Home Valuation Code of Conduct went into effect. This states that, among other things, appraisers have to be chosen at random. This has caused a great deal of stress for homeowners and real estate professionals, since you can’t always be sure of the quality of appraisal you will get. Your best bet: try to make sure that the appraiser does a truly thorough, physical, on-site inspection of the property and (this is important, folks) is well-versed in the history of the property as well as local comps and real estate issues. You can still get the most out of your appraisal (and hopefully, help your chances at loan approval) if you take a proactive role in assuring that happens.