Identity
Give to every buyer at first meeting
Government-issued photo ID Must not be expired — check before contract
Social Security numberFor credit authorization
2 years of residential addressesInclude any moves in last 24 months
Green card or visa documentation (if non-US citizen)Visa type determines eligible programs
Income — W-2
2 most recent pay stubs Must show year-to-date earnings
W-2s — last 2 years, ALL employers
Federal tax returns — last 2 years (ALL pages)Every page. Missing one page = delay
Divorce decree (if paying/receiving alimony)
Income — Self-Employed / 1099
Personal tax returns — last 2 years (ALL pages)
Business tax returns — last 2 yearsRequired if owning 25%+ of a business
Year-to-date Profit & Loss statementCPA-prepared preferred
Business bank statements — last 3 months
Assets & Down Payment
Bank statements — ALL accounts, last 2 monthsEvery page — including blank ones
Gift letter (if any funds are gifted)Signed, dated — states it is a gift not a loan. No letter = cannot use funds
Documentation for large depositsAnything over ~50% of monthly income needs a paper trail
Credit
Pull own credit at annualcreditreport.com firstKnow what's there before the lender does
List of all monthly debts with balances
12 months cancelled rent checks or landlord letterStrong compensating factor — especially for borderline approvals
Explanation letters for any derogatory marksOne per item — factual, brief
The 4 C's of Every Approval
What the underwriter is actually evaluating
C
CREDIT — Score + history. Recent history matters more than old marks. Late payment last month hurts more than a collection from 3 years ago. Minimum: 620 conventional · 580 FHA · VA no minimum.
C
CAPACITY — Debt-to-income ratio. Total monthly debts ÷ gross monthly income. Conventional: up to 45-50%. FHA: up to 57% with compensating factors. This is the #1 denial reason.
C
CAPITAL — Down payment + reserves. Not just the down payment. Underwriters want to see money left over after closing. Retirement accounts count at 60-70% of vested value.
C
COLLATERAL — The property. Appraisal must support the purchase price. Condos need HOA review. FHA/VA have minimum property conditions. Unusual properties = more scrutiny.
Banks vs Brokers
Know the difference — your buyers will ask
BANK
Direct lender. Funds from their own money. Fewer loan programs. Benefit: fewer parties = can lower some closing costs. Best for: straightforward W-2 buyers with clean credit.
BROKER
Shops multiple lenders. More programs. More flexibility for complex files. Best for: self-employed, complex income, previous credit challenges. May carry slightly higher fees.
Buyer Conversation Scripts
Word-for-word responses — memorize these
"I have good credit — I should be fine, right?"
"Credit is just one piece. There are four things an underwriter looks at — credit, income, assets, and the property. Your score gets you in the door, but your debt-to-income ratio determines how much you can borrow. Let's look at the full picture before we fall in love with a house."
Sets up a lender conversation without alarming them
"Can I just get pre-approved and go from there?"
"Absolutely — we will. But here's what most agents don't tell you: a pre-approval is the loan officer's best estimate. The real decision comes from the underwriter weeks later after they verify every document. The buyers who close fastest are the ones whose file is organized before they even apply."
Positions organized buyers as better buyers. Creates urgency to prepare.
"I was denied before. Is it worth trying again?"
"Almost every denial is fixable. The question is knowing exactly what to fix. In many cases it's one number, one account, or one document away from an approval."
Gives hope without making promises. Drives toward action.
"What loan program should I use?"
"That depends on your credit score, down payment, and property type. FHA has lower requirements but charges mortgage insurance for life of the loan. Conventional PMI drops off at 20% equity. VA is zero down with no PMI if you're eligible. Your loan officer will help you compare — but now you know what to ask."
Shows program knowledge. Protects you from giving specific advice outside your lane.
Credit Red Flags
Spot these before you write an offer
Score below 620 — may limit to FHA only
→ Get pre-approval with credit review first
Late payments in the last 12 months
→ Explanation letter + underwriter discretion
Collections or charge-offs in last 24 months
→ Program-specific rules — confirm with LO
Maxed-out credit cards (utilization above 80%)
→ Pay down below 30% — can move score 30-60 days
Income Red Flags
Self-employed less than 2 years
→ Limited documentation options
Income declining year over year on tax returns
→ Underwriter uses lower year only
Large write-offs on Schedule C
→ Reduces qualifying income — know before shopping
New job within last 60-90 days
→ Offer letter required — same field helps
Deal-Killing Scenarios
Educate buyers at contract signing
Buyer opens new credit after pre-approval
→ Changes DTI — can kill closing
Buyer changes jobs between pre-approval and closing
→ Call lender immediately if this happens
Large unverified deposit appears before closing
→ Document the source — do not move large cash
Property appraises below purchase price
→ Renegotiate · bring cash · or use appraisal contingency
Loan Program Quick Reference
| Program | Min Score | Min Down | PMI/MIP | Best For |
|---|---|---|---|---|
| Conventional | 620 | 3-5% | Drops at 20% | Good credit, stable income |
| FHA | 580 | 3.5% | Life of loan | Lower credit, higher DTI |
| VA | None* | 0% | None | Veterans, active duty |
| USDA | 640 | 0% | 0.35%/yr | Rural/suburban areas |
Program Decision Rules
1
Eligible for VA? Use VA. Zero down. No PMI. Best terms available for eligible borrowers.
2
Rural property? Check USDA eligibility first. Zero down and lower MIP than FHA.
3
Score 680+? Run conventional vs FHA comparison. Conventional PMI drops off — FHA MIP does not.
4
Score below 640 or DTI above 45%? FHA is likely the path.
The 10 Rules — Tell Every Buyer at Contract Signing
1
No new credit accounts. No new cards, car loans, buy-now-pay-later. None.
2
Do not close existing accounts. Can hurt your score and DTI.
3
Do not change jobs without calling your lender first.
4
No large cash deposits without a paper trail. Document every dollar.
5
Do not co-sign loans for anyone. Adds to your debt obligations.
6
No large purchases on credit — appliances, furniture, cars. Wait until after closing.
7
Respond to lender requests within 24 hours. Every day of delay costs you.
8
Keep all accounts active with normal regular activity.
9
Tell your lender immediately about any financial changes. Over-communicate.
10
Stay in contact with your loan officer. Know where your file is at all times.
Get the Full MasterClass
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This toolkit is for educational purposes only. Does not constitute financial, mortgage, or legal advice. Does not guarantee loan approval.
Jennifer Heller | NMLS# 2375826 | The Everyday Underwriter, LLC | Equal Housing Lender
© 2026 The Everyday Underwriter MasterClass. All rights reserved.
Jennifer Heller | NMLS# 2375826 | The Everyday Underwriter, LLC | Equal Housing Lender
© 2026 The Everyday Underwriter MasterClass. All rights reserved.