Buying a home is a major financial decision. Even small financial changes during the mortgage process can affect your approval, interest rate, or closing timeline.
If you are preparing to apply for a mortgage—or are already under contract on a home—there are several important financial actions you should avoid.
- Avoid New Debt or Credit Inquiries
When you apply for a mortgage, your lender carefully reviews your credit history, score, and existing debts. New credit inquiries or accounts can quickly change that picture.
Why it matters:
- Each new inquiry can temporarily lower your credit score.
- Opening new credit lines can signal higher risk to lenders.
What to avoid:
- Applying for new credit cards
- Taking out personal loans
- Financing a vehicle or other large purchase during the loan process
Keeping your credit profile stable makes it easier for your lender to approve your application on the terms you are expecting.
- Avoid Major Purchases
Large purchases—especially those made on credit—can increase your debt-to-income (DTI) ratio, which is a key factor lenders use to determine how much you can borrow.
Examples of purchases to delay:
- Furniture and décor for the new home
- Appliances
- Vehicles, boats, or recreational equipment
Even with promotional financing, new debt can lower your qualifying amount or delay your application.
- Avoid Changing Jobs
Lenders look for steady, predictable income. A sudden job change can raise questions about income stability, even if the new position offers higher pay.
Potential issues with changing jobs:
- A probationary or training period in a new role
- Moving from a salaried position to a commission-based or self-employed position
- Gaps in employment history
If possible, wait to change jobs until after your loan has closed. If a change is unavoidable, speak with your loan officer in advance so they can help you understand the potential impact and documentation required.
- Avoid Large, Unexplained Deposits or Transfers
Your lender must verify the source of funds used for your down payment and closing costs. Large, undocumented deposits or frequent transfers can slow this process.
What to avoid:
- Large cash deposits without documentation
- Moving significant sums between accounts without a clear purpose
- Using funds from unverified sources
If you expect to receive a gift from a family member or transfer funds from investments, inform your lender early. Proper documentation helps keep your loan on track.
- Avoid Closing Credit Cards
It may seem wise to close unused credit cards before applying for a mortgage, but doing so can actually harm your credit profile.
Why closing cards can hurt:
- It reduces your total available credit, potentially increasing your credit utilization ratio.
- It may shorten your average account age, another factor in your credit score.
Instead of closing accounts, consider keeping them open with low or zero balances while you are in the process of buying a home.
- Avoid Co-Signing for New Debt
Co-signing a loan for someone else is a significant financial responsibility. Even if you are not making the payments, lenders will treat that debt as part of your obligations.
Co-signing can:
- Increase your debt-to-income ratio
- Reduce the amount you can qualify for on your own mortgage
- Expose you to potential late payments if the primary borrower misses a due date
If you are planning to buy a home, consider postponing any decisions to co-sign until after your mortgage has closed.
- Avoid Missing Payments
Payment history is a major component of your credit score. Even a single late payment can have a meaningful impact, particularly in the months leading up to a home purchase.
Make sure to:
- Pay all credit card bills on or before the due date
- Keep loan and utility accounts current
- Set up automatic payments or reminders to help avoid oversights
Consistent, on-time payments demonstrate reliability and support a stronger mortgage application.
Staying Financially Prepared for Homeownership
The period between deciding to buy a home and sitting down at the closing table is critical. By avoiding new debts, major financial changes, and credit missteps, you help protect your credit profile and borrowing power.
If you’re considering buying a home and want to know how these actions affect your finances, work with an experienced banking professional for clarity and confidence.
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