Your Pre-Approved Mortgage Is Denied–What Happened?
Your Pre-Approved Mortgage Is Denied — What Happened?
Updated January 2025
Being pre-approved for a mortgage is one of the most empowering steps in your home-buying journey. It gives you a clear price range, strengthens your offers, and helps you focus on homes you can comfortably afford. But pre-approval isn’t a final guarantee. Sometimes, the lender’s decision changes—often right before closing—and it can leave buyers stunned.
If your pre-approved mortgage is suddenly denied, you’re not alone. Here are the most common reasons this happens and how to avoid surprises while you’re preparing to buy your new home.
1. Employment or Income Changes
Once you’ve been pre-approved, lenders expect your employment, income, and job stability to remain the same through closing. Changes can immediately impact approval. Major red flags include:
- Accepting a new job in a different field
- Taking a pay cut or switching from salary to commission
- Quitting a job to start a new business
If you receive an amazing offer or must change jobs, talk to your lender first. Moving to a similar role in the same industry with equal or higher income is usually fine—just confirm before you leap.
2. A Hit to Your Credit Score
Lenders monitor your credit until the day of closing. Even small changes can matter. Avoid:
- Late or missed payments
- New debt collections
- Large purchases that increase your credit utilization
Check your credit frequently using a reputable free monitoring service and dispute any errors immediately.
3. Opening New Credit Accounts
Retail cards, auto loans, furniture financing, or even “0% promotional offers” can derail your mortgage approval. Every new credit line reduces your borrowing capacity—money lenders need to see available for your home loan.
If it’s not essential, save it for after closing.
4. Large or Unexplained Bank Account Changes
Lenders look for stability. Sudden large withdrawals or deposits can raise concerns about debt, undisclosed loans, or financial risk. Before moving money around:
- Avoid withdrawing large sums without documentation
- Keep a clear paper trail for any deposits
- Notify your lender before transferring money between accounts
5. Missing or Incorrect Documentation
If your lender requests paperwork—bank statements, pay stubs, tax documents—submit them quickly, fully, and accurately. Missing items can delay underwriting or result in a denial.
6. Not Having Enough Cash to Close
Even with a strong pre-approval, lenders still need to verify you have enough funds for:
- Your down payment
- Closing costs
- Reserve funds (if required)
Having a comfortable financial cushion reduces risk and gives lenders more confidence in your loan.
How to Protect Your Pre-Approval
Think of your pre-approval as a living, vulnerable status—not a final approval. You can protect it by:
- Maintaining consistent employment and income
- Avoiding new debt or major purchases
- Keeping your credit score stable
- Providing documentation quickly
- Staying in communication with your lender
The Ernest Homes team is here to help you navigate every step of the buying process, including keeping your pre-approval secure. Have questions about financing or getting ready to purchase your new home? Call us at (912) 756-4135 or contact us online today.
