A red octagonal stop sign with bold white lettering stands at an intersection, with a green street sign attached. The background features trees, power lines, and a bright sky with scattered clouds, typical of a suburban or rural area.

Homebuying Mistakes That Can Ruin Your Approval

One wrong financial move could make your approval disappear overnight. Yes, it happens! Lenders keep checking your finances up until closing day, and certain mistakes can make them change their minds at the last minute.

In this post, we’ll cover:

  • The biggest financial mistakes homebuyers make
  • Why lenders reject loans before closing
  • How to keep your approval secure until you get the keys

Mistake #1: Opening New Lines of Credit

  • Biggest mistake: Taking out a new credit card or loan before closing.

Lenders calculate your debt-to-income (DTI) ratio when they approve your loan. If you suddenly take on new debt, your DTI increases—and that can cancel your approval.

  • Example: You’re excited about your new home, so you open a Home Depot credit card for furniture. Your lender sees new debt on your report and lowers your loan amount or cancels it altogether.
  • What to do instead: Wait until AFTER you close to make big purchases or open new credit accounts.

Mistake #2: Making Large Deposits Without Documentation

  • Lenders don’t like surprises. If large, unexplained deposits show up in your bank account, they’ll assume it’s borrowed money—even if it’s a gift.
  • Example: Your aunt sends you $10,000 to help with closing costs. If it’s not documented as a gift (with a formal letter), the lender might reject your application.
  • What to do instead: Talk to your lender before depositing large sums of money into your account. If it's a gift, make sure it's properly documented.

Mistake #3: Changing Jobs Before Closing

  • A new job might seem like a good thing, but lenders see it as instability.

They want to know you have consistent, reliable income. If you switch jobs—especially to a different industry—they may delay or cancel your approval.

  • Example: You get a higher-paying job in a different field right before closing. Since your lender can’t verify job stability, they pull your loan approval.
  • What to do instead: If you’re thinking about changing jobs, wait until after you’ve closed on your home.

Mistake #4: Missing Payments or Maxing Out Credit Cards

  • Your credit is checked multiple times during the homebuying process. Any late payments, maxed-out cards, or sudden credit score drops can ruin your approval.
  • Example: You accidentally miss a car payment, and your credit score drops by 50 points. Now, your lender re-evaluates your approval and either raises your interest rate or denies your loan.
  • What to do instead: Continue paying all bills on time and keep credit usage low until after closing.

Final Thoughts: Keep Your Finances Steady Until Closing

  • No new debt, no new credit cards, no big purchases.
  • Don’t change jobs unless absolutely necessary.
  • Document all large deposits before putting money in your account.
  • Keep making payments on time—your lender is still watching.

The key to a smooth homebuying process? Stay financially stable until the deal is done.

Watch the Full Conversation

Want to make sure you don’t lose your home loan approval? Watch this part of the discussion here:

Video Timestamp: 22:50 - 30:45

In Part 5, we’ll dive into home inspections—what to look for and how to avoid buying a money pit. 

#Realtor #RealEstateAgent #FirstTimeHomeBuyer #InvestmentProperty

Back to News