Why Pre-Approval Is Just the Beginning

Getting pre-approved is a great milestone, but it’s not a guaranteed green light for homeownership. In fact, many buyers in 2025 are surprised to learn how easily a loan can fall through after pre-approval.

According to Erin Barrows, “Your mortgage approval depends on several moving parts. It’s my job to help you avoid the most common issues before they become costly delays.”

Here are the four biggest reasons mortgage applications are being denied in 2025—and what you can do to stay on track.

1. Debt-to-Income Ratio (DTI) Is Too High

This continues to be the number one reason for mortgage denials nationwide. DTI compares your monthly debt obligations—like credit cards, student loans, and car payments—to your gross income. The higher your DTI, the riskier you appear to lenders.

“With today’s home prices, it’s easy for buyers to get stretched too thin,” Erin explains. “Even a strong credit score can’t always compensate for a high DTI.”

How to avoid it: Pay down revolving debt before you apply. Focus especially on high-interest credit cards and auto loans, which can make a big impact on your DTI.

2. Credit Score Issues

Even if you meet the minimum score for a loan program, a weaker credit profile can still make approval harder—or more expensive.

“A lot of buyers assume hitting the minimum score is enough,” Erin shares on erinbarrows.com/home. “But late payments, high balances, or multiple new accounts can work against you.”

How to avoid it: Keep credit balances low, avoid any late payments, and don’t open or close any credit accounts while you’re shopping for a home.

3. Not Enough Funds to Close

Many buyers focus on saving for the down payment but overlook the additional cash needed for closing costs and reserves. Lenders typically want to see that you can handle not just the purchase, but also the expenses that come with it.

“Insufficient funds is a surprisingly common hurdle,” Erin notes. “Start building your savings early—even small, consistent contributions add up.”

How to avoid it: Work with your lender early to understand all the costs involved in your purchase. Budget for closing costs, prepaid taxes and insurance, and a cushion for reserves.

4. Financial or Employment Changes Mid-Process

This one catches many buyers off guard. Changing jobs, financing a new vehicle, or co-signing a loan can all throw a wrench in your mortgage process.

“It might seem harmless, but even a promotion or job switch can delay or derail your approval if it happens mid-transaction,” Erin warns.

How to avoid it: Keep your employment and finances stable from pre-approval through closing. Always talk to your lender before making any major financial moves.

The Bottom Line

Getting pre-approved is a smart first step—but it’s just the beginning. By understanding these common pitfalls, you’ll be better prepared to move through the mortgage process with confidence.

“If you’re planning to buy a home in 2025, I’m here to guide you through it the right way,” Erin says. “No surprises, no missed opportunities—just a clear path to homeownership.”

Sources: NAR.realtor, Experian.com, FreddieMac.com, Realtor.com