By David Delgado | Freedom Choice Lending

One of the most powerful ways you can stand out is by understanding how lenders actually review a mortgage application—not just what buyers think matters, but what underwriters and loan officers look at first.

When you know this, you can:

• Pre-qualify more accurately
• Prevent last-minute deal blowups
• Set better expectations with sellers
• Close faster and with less stress

Let’s break it down clearly and simply.

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The Big Picture: Lenders Think in Risk Buckets

Before numbers, documents, or even credit scores, lenders ask one question:

“Is this borrower a reasonable risk for this loan program?”

Everything else flows from that. To answer it, lenders review a mortgage application in a specific order.

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1. Income & Job Stability (This Comes First — Always)

Before credit scores, assets, or down payment, lenders want to know:

Is the borrower’s income stable, predictable, and documentable?

They look at:

• Employment history (usually 2 years)
• Type of income (salary, hourly, commission, self-employed)
• Consistency (same line of work matters)
• Likelihood the income will continue

💡 Agent Tip:
A buyer with a 740 credit score but unstable income is riskier than a buyer with a 660 score and rock-solid employment.

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2. Debt-to-Income Ratio (DTI): Can the Payment Fit?

Next, lenders run the math:

Can this borrower realistically afford the new payment on top of their existing debts?

They calculate:

• Housing payment (principal, interest, taxes, insurance, HOA)
• Monthly liabilities (cars, credit cards, student loans)
• Gross monthly income

Most conventional loans allow up to ~45–50% DTI, depending on strength elsewhere in the file.

💡 Agent Tip:
If your buyer just bought a car, co-signed a loan, or carries balances, it directly affects approval—even if they’re “pre-approved.”

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3. Credit Profile (Not Just the Score)

Yes, credit matters—but lenders look beyond the number.

They evaluate:

• Payment history (late payments are red flags)
• Revolving utilization
• Recent inquiries or new accounts
• Collections or charge-offs
• Overall credit behavior

A clean 680 often beats a messy 720.

💡 Agent Tip:
Encourage buyers to avoid new credit, large purchases, or balance increases during escrow.

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4. Assets & Reserves: Can They Close (and Survive)?

Now lenders verify:

• Down payment source
• Closing costs
• Reserves (months of payments left over after closing)

They want to know:

Does this buyer have enough cash to close and still be financially stable?

Gift funds? Fine—but they must be documented correctly.

💡 Agent Tip:
Unverified cash deposits are one of the most common causes of loan delays.

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5. Property & Appraisal (Last, But Still Critical)

Finally, lenders evaluate the home itself:

• Appraised value
• Property condition
• Acceptability for the loan program
• Marketability

The lender isn’t asking, “Is this a great house?”
They’re asking, “If we had to sell it, could we?”

💡 Agent Tip:
Unique properties, condition issues, or missing permits should be discussed before submitting offers.

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Why This Matters for You as an Agent

When you understand what lenders look for first, you:

• Stop over-relying on surface-level pre-approvals
• Ask smarter questions upfront
• Position offers more confidently
• Protect your time and reputation

Most failed escrows aren’t about price—they’re about misaligned expectations between buyer, agent, and lender.

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How I Help Agents Win More Deals

At Freedom Choice Lending, I don’t just issue pre-approvals—I:

• Stress-test buyer files upfront
• Flag risks before offers are written
• Communicate clearly with agents and listing sides
• Structure loans strategically, not emotionally

If you want cleaner escrows, stronger offers, and fewer surprises, it starts with knowing the lender’s mindset.

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Final Thought

The best agents don’t just sell homes—they understand financing well enough to guide buyers confidently.

Direct Line (562) 281-6163
Main Office (866) 587-6927
David Delgado – NMLS #349079
Presiden/CEO
Freedom Choice Lending
NMLS #1998153

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