An approval is a snapshot of your credit, income, debts and cash on the day the lender ran it. Before closing, the lender takes a second look. Fannie Mae requires the job to be verified again within 10 business days of the note date, many lenders recheck credit right before closing, and the bank statements you send near the end have to match the ones you sent at the start. The safest plan is to keep everything the way it was when you were approved.
Eight things to hold off on until after closing
- Opening new credit. A new card, a store financing plan or a personal loan adds an inquiry and, usually, a monthly payment.
- Financing a car. A car payment counts against your debt-to-income ratio dollar for dollar. Drive the old one until the keys to the house are in your hand.
- Co-signing for anyone. A loan you co-sign shows on your credit report, and the lender generally counts its payment as yours.
- Changing jobs or pay type without calling first. A move in the same field at equal pay is usually routine, and a switch to commission is not. The job change page shows the difference.
- Depositing cash you can't document. Large deposits get questions. FHA flags single deposits over 1% of the price, and Fannie Mae flags those over 50% of your monthly income. Cash saved at home has its own path.
- Moving money between accounts without statements for both. Transfers are fine when the lender can see both sides. Keep the statements for any account money passes through.
- Missing or paying late on anything. One 30-day late payment can drop a score enough to change your price or program. Set every bill on autopay until closing.
- Closing old credit cards. Closing a card removes its limit from your total available credit, which raises your credit utilization and can lower your score.
A worked example: one store card
Jasmine earns $5,000 a month and already pays $600 a month on a car loan and two cards. She's pre-approved for FHA with 3.5% down at a 5.75% rate on a 30-year fixed, with taxes at about 0.90% of the price a year and insurance at $283 a month. FHA's automated limits allow a housing payment up to 46.9% of income and total debts up to 56.9%.
Two weeks before closing, she opens a store card and charges $5,000 of furniture. Her credit report shows the balance but no payment yet, so the lender counts 5% of the balance, the figure FHA and Fannie Mae both use when no payment is listed and the one our calculator uses: $5,000 × 5% = $250 a month.
| Before the store card | After the store card | |
|---|---|---|
| Monthly debts | $600 | $850 |
| Housing limit (46.9% × $5,000) | $2,345.00 | $2,345.00 |
| Total limit (56.9% × $5,000 = $2,845, minus debts) | $2,245.00 | $1,995.00 |
| Highest housing payment (lower of the two) | $2,245.00 | $1,995.00 |
| Approximate FHA price | $283,400 | $247,300 |
The furniture costs her about $36,100 of buying power. If she's under contract at $280,000, the new payment can push her ratios past FHA's limits days before closing. The same $5,000 paid in cash a week after closing would have changed nothing.
If one of these already happened
Tell your loan officer right away, because almost everything on this list has a fix when the lender hears about it early. A new card balance paid back to zero drops its payment out of your debts. A new inquiry with no new account usually needs only a short letter of explanation. A cash deposit can be documented with a receipt or a written explanation of where it came from. A higher debt load can sometimes be offset by paying off a small loan, adding a co-borrower or choosing FHA's higher ratio limits. A late payment can be explained, and a rapid rescore can update the credit report once balances drop.
The DTI calculator shows how any new payment moves your ratios before you sign for it. When you're thinking about a purchase, a job move or a deposit, call AAA Capital Funding at 888-601-8344 first, and we'll tell you what it does to your approval before it happens.