The Loan Approval Playbook: What Lenders Look for and How to Prepare Your Clients
Empower Your Buyers. Protect Your Pipeline. Close More Deals.
As a real estate agent, your job doesn’t stop at finding the perfect home — you’re also guiding clients through one of the most financially scrutinized processes they’ll ever face: mortgage loan approval.
And let’s face it — the loan process can be a deal breaker.
Understanding what lenders look for and preparing your clients early gives you a competitive edge. More importantly, it prevents surprises, saves time, and helps you close more deals with confidence.
🧠 What Lenders Actually Look For
Before they approve any loan, lenders review five major areas — known as the 5 C’s of Credit:
1. Credit History
Lenders assess your client’s credit score, payment history, and types of credit used. Most conventional loans require a minimum score of 620, but higher scores (680–740+) qualify for better rates.
Common issues:
Late payments
Collections or charge-offs
High credit utilization
Disputes or inaccuracies on reports
✅ Agent Tip: Recommend your client pull their report from all three bureaus before applying. If their score is low, refer them to a trusted credit repair partner like REI Invest Capital for rapid solutions.
2. Capacity (Income)
This refers to your client’s ability to repay the loan based on stable, documented income.
Lenders will want to see:
Consistent income over 2+ years
Pay stubs, tax returns, W-2s or 1099s
Bank statements for self-employed clients
✅ Agent Tip: Encourage clients to avoid job changes or inconsistent deposits during the homebuying process.
3. Capital (Assets & Reserves)
Lenders check for savings or assets that cover the down payment, closing costs, and sometimes a few months of reserves.
Acceptable sources include:
Checking or savings accounts
Retirement accounts
Gift funds (if properly documented)
✅ Agent Tip: Make sure your client documents large deposits — especially from non-payroll sources. Undocumented funds can delay or kill approval.
4. Collateral (The Property)
The home being purchased is the lender’s security. They’ll order an appraisal to confirm the property is worth the loan amount.
The appraisal determines:
Market value
Property condition
Comparable home sales in the area
✅ Agent Tip: Educate buyers on the importance of the appraisal — it’s not a home inspection, but it can make or break the deal.
5. Conditions (Loan Requirements & Guidelines)
Lenders also evaluate outside factors like loan program guidelines, employment verification, and debt-to-income (DTI) ratios.
Most lenders want a DTI under 43%.
Calculate it by dividing total monthly debts by gross monthly income.
✅ Agent Tip: If your client is close to the DTI limit, advise against new credit cards, car loans, or furniture purchases until after closing.
🔍 How You Can Prepare Your Clients (and Save the Deal)
✅ Start the Conversation Early
During your buyer consult, ask more than “Are you pre-approved?”
Ask:
“When was your credit last pulled?”
“Have you reviewed all three credit reports?”
“Do you have savings set aside for down payment and closing costs?”
✅ Connect Them With a Lender — or Three
Encourage your client to shop lenders and compare interest rates, terms, and fees. Having a trusted lender partner ensures you stay looped in on progress.
✅ Recommend Credit Repair (Before It’s Too Late)
If your client’s score is under 640, or if they’ve had previous financial hiccups, refer them to REI Invest Capital for:
Credit repair
Credit sweeps
Rapid rescoring (3–7 days)
Authorized tradelines to boost history
This can save deals from dying in underwriting — or worse, post-contract.
💡 Pro Tip: Stay Proactive Throughout the Deal
As the agent, your client is relying on you for guidance. Here's how to help them succeed:
Remind them to avoid new debt or job changes during escrow
Stay in touch with the lender weekly
Make sure all financial documents are submitted on time
Coordinate quickly for appraisal, inspections, and conditions
🚀 Ready to Become the Agent Lenders Love?
When you understand the loan process, you close smoother, faster, and more consistently — with happier clients and higher referral rates.
But more importantly, you prevent the heartbreak of losing a deal due to a credit issue that could’ve been solved weeks earlier.
📞 Let’s Help Your Clients Get Mortgage-Ready
Refer buyers to REI Invest Capital for fast, reliable credit solutions and keep your commission pipeline flowing:
🔗 www.LoanCreditRepair.com
📞 312-626-0116
Your buyer’s loan shouldn’t be a mystery. Use the playbook. Prepare early. Close confidently.