When it comes to buying a home, getting pre-approved for a mortgage feels like a huge win. But according to Tricia Reece, a trusted loan officer at triciareece.com/home, it's just the beginning. "Pre-approval tells you what you can likely afford, but it doesn't guarantee final approval," she explains. "There are still several pitfalls that can derail the process if you're not careful."

Here are the most common reasons mortgage applications are being denied in 2025—and what you can do to avoid them.

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

This remains the leading cause of mortgage denials in 2025. Your DTI compares your monthly debt payments to your gross monthly income. Lenders use it to assess how comfortably you can take on a mortgage.

"In today’s market, with higher home prices and tighter budgets, it’s easy for buyers to become overextended," says Tricia. If your DTI is too high, it signals to lenders that you may struggle with additional debt.

How to avoid it: Before applying, look for ways to reduce your existing debts. Paying down credit cards, auto loans, or student loans can make a big difference in improving your approval odds.

2. Credit Score Issues

Even if your credit score meets the minimum requirements, it doesn’t always mean smooth sailing. A lower credit profile can still impact the terms of your loan or delay the process.

"Your credit score affects not just your eligibility but your overall borrowing costs," Tricia points out. "Lenders are more cautious right now, so a strong credit history really matters."

How to avoid it: Pay all bills on time, keep credit card balances low, and avoid opening or closing any accounts during the mortgage process. Monitoring your credit regularly can also help catch and correct any errors before they become an issue.

3. Insufficient Funds for Closing

Saving for a down payment is only part of the equation. Buyers often overlook the additional costs involved in closing a home—like lender fees, title insurance, and prepaid taxes.

"Lenders want to see that you have enough funds not just for the down payment, but also for closing costs and reserves," Tricia explains.

How to avoid it: Start saving early and consistently. Even small, regular deposits into a separate savings account can add up. Ask your loan officer to help estimate the total funds you'll need so you’re not caught off guard.

4. Financial Changes During the Process

This is one of the most preventable yet surprising reasons mortgages fall through. Taking on new debt, changing jobs, or co-signing a loan during your mortgage process can throw off your approval.

"Many buyers assume that once they’re pre-approved, they’re in the clear," says Tricia. "But any major financial change can affect your eligibility, even after your offer is accepted."

How to avoid it: Maintain financial consistency until after closing. Hold off on any big purchases, career changes, or new credit inquiries until you have the keys in hand.

Final Thoughts

As Tricia Reece explains on triciareece.com/home, the mortgage process has a lot of moving parts—and staying informed is key. "My goal is to guide buyers through each step so they’re never caught off guard. With the right preparation, you can avoid these common hurdles and move forward with confidence."

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