Maria, unfortunately, final approval is sometimes delayed until the very last minute. You say that you used the builder's mortage company; did you also use his real estate agent, or did you have your own Buyer's Agent? If you have your own agent, which I'm hoping you did, just ask them to call one of their connections and see if they can have another mortgage lender attend to you. They should also be able to push back closing if necessary.
If you did not use a buyer's agent and you negotiated directly with the builder or their representative, you will need to read the fine print in the contract you signed. There should have been a financial contingency addendum. The verbiage within this addendum will declare what happens if you, the buyer, is financially unable to perform. Hopefully, it says that you can walk away without losing your Earnest Money Deposit. If the contract was written by the builder's attorneys, it may not be favorable to you. However, if the builder is a reasonable person, try talking to him/her about the situation. That is, provided you still want to do business with this person. If he is an honorable person, he will probably let you walk away with your Earnest Money Deposit or, perhaps, find a way to get you into the house you want.
Another thing that you can do is to go to a local mortgage lender and ask them if they will give you a Good Faith Estimate. This document will tell you the amount of mortgage that they would approve for you. A local lender might be the bank you do business with, your credit union, or another local bank that has a good reputation in your community.
If this deal falls through, please find a Realtor to represent you as your Buyer's Agent before you start house hunting again. The agent will help you find a good lender first. Then the agent will show you the different choices available in houses that meet your lifestyle, location, and financial criteria. There are many resale and new houses for sale right now and one of them will be right for you. Your agent can help you weigh the pros and cons of each house so that you choose wisely before writing a contract.
Please let me know how this turns out for you. I can feel your disappointment.
Best Wishes, Maria Morton