Why Would a Home Buyer Lose Financing?
Why Would a Home Buyer Lose Financing?
By Allen Deaver – Asset Realty
Buying a home is one of the most exciting milestones in life—but nothing brings the process to a halt faster than losing your financing. As a trusted real estate agent with Asset Realty, I’ve seen this happen more than once, and it’s usually avoidable with the right knowledge and preparation. Here are some of the most common reasons homebuyers lose their financing, and how you can avoid these pitfalls.
Changes in Employment or Income
Lenders approve your mortgage based on your current job and income. If you switch jobs, reduce your hours, or take unpaid leave during the loan process, it could raise red flags. Even if you’re moving to a higher-paying position, the lender may need time to verify everything, which can delay or cancel your loan approval.
Tip: Wait until after closing before making any major career moves.
Opening or Increasing Debt
Taking on new debt—like financing a car, opening a credit card, or buying furniture—can change your debt-to-income (DTI) ratio. If your DTI gets too high, you might no longer qualify for the loan amount originally approved.
Tip: Hold off on any new credit activity until the home is officially yours.
Credit Score Drops
A sudden drop in your credit score can be a deal-breaker. This can happen due to missed payments, new inquiries, or increased balances on existing accounts. Lenders typically pull your credit at the beginning and may check it again before closing.
Tip: Monitor your credit closely during the buying process and pay all bills on time.
Large, Unexplained Bank Deposits
If you receive a large deposit in your bank account that doesn’t match your income history, lenders will want to know where it came from. Unverified funds can delay underwriting or cause your loan to be denied.
Tip: Be ready to document the source of any large deposits—especially gifts from family or the sale of assets.
Low Appraisal Value
If the home doesn’t appraise for the agreed purchase price, the lender may reduce the loan amount, leaving you to cover the difference or renegotiate with the seller. If neither is an option, financing can fall through.
Tip: Make sure your agent includes an appraisal contingency in your offer for protection.
Missing Documentation
Mortgage lenders require a mountain of paperwork—tax returns, bank statements, pay stubs, and more. Failing to provide complete or accurate documentation can slow down or even derail your loan approval.
Tip: Respond to your lender’s requests quickly and provide clear, organized paperwork.
Final Thoughts
Allen Deaver of Asset Realty guides his clients through every step of the home buying process to help avoid surprises like financing issues. If you’re thinking about buying a home in Central Texas, let’s connect and make sure you’re fully prepared from pre-approval to closing. If you have questions or need help getting started? Reach out today—I’m here to help!
