Key Takeaways
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Mortgages can fall through even after preapproval if finances change before closing.
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Big purchases or new credit can raise your debt ratio and lower your credit score.
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Employment changes may delay or deny final loan approval.
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Low appraisals often require renegotiation or extra funds to close.
Few things are more stressful for a homebuyer than reaching closing day only to learn that the mortgage fell through. Fortunately, understanding the common reasons mortgages fall through before closing and knowing how to respond can help protect your homeownership plans. Even if your loan is denied or delayed, the right strategy can get you back on track.
Common Reasons Mortgages Fall Through Before Closing
Even with a preapproval, lenders recheck your financial situation before closing. Below are the most frequent causes and how to respond:
| Reason | Why It Matters | What You Can Do |
| Big Purchases Before Closing | Raises your debt-to-income ratio (DTI), making you appear riskier to lenders. | Hold off on major purchases, pay down debt, or adjust your budget to fit lender guidelines. |
| Applying for New Credit | Lowers your credit score and signals financial instability. | Avoid new credit cards or loans, and focus on paying bills on time while reducing balances. |
| Job Change or Employment Loss | Income stability is reverified before closing, and changes can disqualify your loan. | Be transparent with your lender. If necessary, wait a few months to demonstrate steady employment. |
| Low Home Appraisal | When the home appraises for less than the purchase price, lenders won’t finance the full amount. | Renegotiate the price, pay the difference in cash, or challenge the appraisal with new data. |
How to Protect Your Mortgage Approval
Preparation and communication are the best ways to prevent issues. Avoid financial changes until after closing. If unexpected circumstances arise, notify your lender immediately. Staying proactive helps keep the process moving smoothly.
The Bottom Line
A mortgage falling through before closing can feel discouraging, but it doesn’t have to end your homeownership journey. By avoiding big purchases, holding off on new credit, maintaining job stability, and preparing for potential appraisal issues, you can minimize risks. When problems occur, work closely with your lender to find solutions and keep your path to homeownership on track.
FAQs About Mortgages Falling Through Before Closing
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