Seven Things You Must Never Do During Loan Approval
· Loan Talk
One mistake during underwriting can kill your deal. Here's what lenders watch closely in September 2026.
Between the moment your offer is accepted and the day you close escrow, your loan application enters a critical window called underwriting. This period typically lasts 21 to 45 days, depending on the complexity of your file and the lender's workload. During this time, the lender's underwriting team is verifying every detail of your financial picture: employment, income, assets, debts, credit history, and the property itself. Many new immigrants and international buyers are surprised to learn that lenders do not just check your finances once and approve the loan. Instead, they monitor you continuously until the very last day of escrow. A single careless action during this window can trigger additional requests for documentation, delay your closing date, or in the worst cases, result in the lender withdrawing their commitment entirely. Understanding what not to do is just as important as understanding what you should do.
The first and most serious mistake is making a large deposit into any bank account without a documented source. During underwriting, the lender will typically order a full asset verification, which includes bank statements going back 30, 60, or sometimes 90 days. If a substantial deposit appears that the lender cannot trace back to a clear, documented source—such as a wire transfer from another account you own, a bonus from your employer, a gift from a family member, or a legitimate business transaction—the underwriter will flag it as suspicious. This is not paranoia; lenders are required by federal regulations to prevent money laundering and to verify that borrowed funds are not commingled with undocumented cash. If you need to deposit money from overseas or from a gift, inform your lender immediately, provide a signed gift letter (if applicable), and show the complete paper trail. Many deals have fallen apart at the last minute because a buyer did not understand that a large, unexplained deposit could derail approval, even if they had perfectly good intentions.
The second critical mistake is opening a new credit card, applying for an auto loan, or taking on any other new debt during the loan approval period. Even a small new account can trigger problems. When a lender pulls your credit report during underwriting and then again on the day before closing, they are comparing two snapshots. If a new line of credit appears on the second report, the underwriter will want to know why, will recalculate your debt-to-income ratio, and may discover that you no longer qualify for the loan amount you were approved for. This is particularly risky for buyers who are already carrying student loans, car payments, or high credit card balances. Additionally, applying for new credit causes a hard inquiry on your credit report, which can lower your credit score by a few points—not ideal when your score is already being scrutinized. The rule is simple: do not apply for any credit, do not open any new accounts, and do not make large purchases on existing credit cards during the approval period. Wait until after closing day.
The third mistake is changing jobs or leaving your current position before closing. Even if you are moving to a job with higher pay or better prospects, the lender needs stability and verification. Your employment is one of the primary pillars of your approval decision. When you change jobs, the lender will ask for offer letters, updated pay stubs, employment contracts, and may require a written explanation. If you have only been in your new job for a short time, the lender may not be able to count your new income toward the approval at all, especially if it is in a different field or represents a significant change. In the worst case, if you resign before closing and have a gap in employment, the lender might ask you to provide proof that you have already started work at the new company or might postpone your closing until you have a few pay stubs from the new employer. The safest approach is to stay in your current role until after you have closed escrow and received the keys to your new home.
The fourth mistake is cosigning a loan or becoming legally responsible for someone else's debt. If you cosign a personal loan for a friend or family member, that debt now appears on your credit report and counts against your debt-to-income ratio. Your lender may discover this during their final verification, recalculate your qualification, and determine that you no longer qualify for the original loan amount. This is an especially common problem in immigrant communities, where family members may ask you to cosign to help them buy a car or consolidate debt. While the impulse to help is understandable, doing so during your own loan approval window is financially dangerous and can jeopardize your own purchase.
The fifth mistake is making large purchases or running up high credit card balances in the months immediately before closing. Even if these purchases are made on credit you already have available, they increase your overall debt load and can lower your credit score slightly through higher credit utilization. More importantly, they signal financial instability to the lender. If you need furniture, appliances, or a car after you close, you can purchase them then. During the approval period, keep your credit cards at low balances and avoid any large discretionary spending. This includes down payment assistance programs and other financing related to your home purchase itself; discuss any such plans with your lender before acting on them.
The sixth mistake is not disclosing all sources of income or hiding income because you fear it will complicate the approval process. This is especially common among self-employed buyers, investors, and those with income from multiple sources. You might assume that reporting rental income, business income, or side-gig earnings will create more paperwork and delay, so you decide to leave it out or understate it. This is a serious error. When the lender orders tax returns, bank statements, and income verification, they will discover undisclosed income anyway. At that point, they have grounds to question your honesty and credibility. In the worst case, they can refuse to lend to you or rescind the approval. It is far better to be transparent upfront, provide thorough documentation, and allow the process to take slightly longer than to create a credibility problem that can sink your entire transaction.
The seventh and final mistake is not maintaining your existing debt payments or allowing accounts to become delinquent. Just as the lender will pull your credit report during approval, they will also typically pull it again within 24 to 48 hours before the closing day. If during that final check they see that a credit card payment has been missed, a utility bill has gone to collections, or an auto loan has fallen behind, they may have grounds to withdraw their approval. Additionally, making late payments signals financial instability at precisely the moment when the lender needs to feel confident in your ability to handle a mortgage. Pay all your bills on time, maintain low credit card balances, and do not let any account slip into delinquency. If you encounter a hardship, contact your creditors immediately; many will work with you to defer a payment or restructure an account, which is far better than letting it default.
In summary, the loan approval period is not the time to be careless with your finances or to make major life changes. Treat these 21 to 45 days as the final stretch of a marathon: stay focused, avoid unnecessary risks, and keep your financial behavior as stable and predictable as possible. If you have questions about what is and is not allowed, ask your lender directly rather than guessing. Every situation is unique, and what matters is having clear, documented communication with the people who control your closing timeline. Shirley and her team at 888 Realty are always available to walk you through the approval process and help you navigate these critical weeks without derailing your purchase.