3 issues that can interfere with a mortgage despite pre-approval

On Behalf of Marcus, Gould & Sussman, LLP | Jan 20, 2026 | Real Estate | Many aspiring home buyers obtain mortgage pre-approval before scheduling tours. They want to know how much home they can afford so that they don’t waste their time viewing properties they cannot purchase. Mortgage pre-approval can help sellers feel more confident about selecting a specific buyer for a property. However, pre-approval isn’t necessarily a guarantee of a finalized and funded mortgage. When are those who have secured pre-approval at risk of still not obtaining a mortgage? After a significant change in circumstances The pre-approval process involves a review of a borrower’s income and credit. Lenders estimate how much of a mortgage the buyer can likely afford, given their current income and their debt-to-income ratio. If any key details about a person’s situation change between when they secure pre-approval and when they seek to finalize the mortgage, the lender might decline to approve the final mortgage. Job loss is one of the most common reasons that a buyer becomes ineligible for a mortgage. The unexpected death of a cosigner or spouse can make it impossible to move forward with the mortgage. In some cases, financial decisions prevent people from finalizing a mortgage. If the aspiring buyer overuses revolving lines of credit or opens a new personal loan between when they secure pre-approval and when they hope to close on the home, the increase in their overall debt and monthly financial obligations could render them ineligible for the mortgage they previously sought. Other reasons why a buyer may not obtain a formal mortgage commitment after having a pre-approval are, of course, issues relating to the appraisal or other conditions relating to the property itself. Pre-approval never address questions about the property. Contracts should have a formal mortgage contingency provision to protect the buyer from their not obtaining the formal unconditional commitment from the lender. Some sellers refuse to agree to a conditional sale and some buyers are willing to risk their contract deposit, believing (in reliance on the pre-approval and hoping that the appraisal will be OK) that they will receive the commitment. That is an individual decision. Some contracts are negotiated with an appraisal condition – that the appraisal will be equal to the purchase price (or within say 90% of the contract price). There are various alternatives and each deal can be different at different times. It often depends on the “market” and the demand versus the supply of “inventory”. Buyers preparing for real estate closings may benefit from learning about contract terms that can protect them if they cannot secure a mortgage despite having pre-approval. Adding contingencies can protect earnest money if a transaction falls through due to unexpected issues with a mortgage.