The 12 Mistakes We See Every Month
We've seen it all. From the borrower who bought a Tesla 3 days before closing to the one who forgot about their co-signed student loan. Avoid these pitfalls to ensure your keys end up in your hand.
Co-signing for anyone else
Even if you aren't making the payments, that entire monthly debt counts against YOUR debt-to-income ratio. This is the #1 reason pre-approvals get canceled.
Changing jobs mid-stream
Lenders need to see stable income. Even a lateral move or a raise can require a new 30-day pay history before we can close your loan.
Switching from W-2 to Self-Employed
Lenders require a 1-to-2 year track record of self-employment. Switching from a W-2 job to a 1099 role resets the clock, even if you are making more money.
Variable income under 2 years
Bonuses, overtime, and commission are 'variable income'. You typically need a full 2-year history of receiving this before a lender can count it.
Less than 2 years hourly pay (FHA)
FHA guidelines are strict about hourly workers. If your hours fluctuate, lenders need a 2-year average to determine your qualifying income.
Employment gaps over 30 days (FHA)
FHA loans require stable employment. If you have a gap of over 30 days in the past two years, you may need to be back on the job for 6 full months to qualify.
Moving without remote work proof
If you're buying in a new state, you must provide a letter from your employer explicitly stating you are approved to work fully remote.
Taking massive tax deductions
Writing off every expense reduces your tax bill, but it also reduces your 'qualifying income'. Lenders look at your net income after deductions.
One bad tax year
If you had $0 income one year and $100k the next, lenders average the two years (qualifying you at $50k). A single bad year drastically impacts purchasing power.
Large unexplained deposits
Every dollar for your down payment must be 'sourced'. If you deposit $5,000 in cash, we likely cannot use it unless we can prove exactly where it came from.
Ignoring 'Seller Credits'
Instead of asking for a lower price, ask for a seller credit to buy down your interest rate. It's often 5x more effective at lowering your monthly payment.
Opening new credit before closing
Buying a car or furniture before funding forces a recalculation of your debt-to-income ratio. If it pushes you over the limit, your loan is denied.
What is the absolute worst thing you can do after getting pre-approved?
The absolute worst thing you can do is open a new line of credit or make a large purchase (like a car or furniture) before your mortgage is funded.
Expert Interpretation
Lenders pull a 'soft' credit refresh 24-48 hours before closing. If a new debt appears, your debt-to-income ratio must be recalculated. If that new $500 car payment pushes you over the limit, the loan is denied—even if you've already packed your boxes.
Decision Matrix
Important Nuance
This doesn't apply if you have massive income and zero debt, but even then, it can cause a 3-5 day delay in closing while the new debt is documented.
How to Stay "Loan-Ready"
The period between pre-approval and closing is a "financial lockdown." Follow these rules to ensure a smooth finish.
Keep it Simple
- Maintain your current employment.
- Keep your bank balances stable.
- Continue paying all bills on time.
Communicate Everything
- Tell us if you receive a bonus or gift.
- Tell us if you need to move money between accounts.
- Tell us if your realtor suggests a new credit.
Step 1 of 4
Your mortgage journey starts here
What is the loan purpose?