A woman works from home on her mortgage application and looks concerned as she faces these six common mortgage application challenges.

The mortgage application has been rumored to be extremely challenging for California and Texas homebuyers to navigate and get pre-approved. The app is very straightforward for homebuyers with a sensible credit score (620 or higher for conventional loans) and evidence of their income and assets. 

The mortgage application is more demanding today than it once was, but homebuyers can still get approved for their desired loan. Underwriters, who review applications and approve loans, have become increasingly stringent when combing through all the details within the loan package and are quick to point out any possible issues. The intention behind this process is not to find reasons to deny the loan; on the contrary, underwriters love to approve loans. Their job is to ensure every part of your loan agrees as they should.

6 Common Mortgage Application Challenges & How To Solve Them

These are the top 6 common challenges most homebuyers face when filling out their mortgage application and the solutions to overcome them. 

Mortgage Application #1: Income

Most applications require a month’s worth of paystubs as evidence of their income. Homebuyers will also need to present last year’s W2. Homebuyers who use overtime income to qualify will also need to show that they have consistently received overtime for the previous 24 months.


Most income documentation can be found and downloaded online through the company’s HR portal. To ensure that there are no delays when uploading income verification documents, ensure the HR department is prepared to complete a Verification of Employment (VOE) thoroughly, timely, and accurately. Ask a manager or supervisor to keep an eye out for a call or email from the lender issuing the application to verify employment.  

Mortgage Application Challenge #2: Multiple Jobs

As a general rule, homebuyers need to show that they have been employed in the same field for at least two years. If homebuyers have been in their current positions for six months or less, lenders will need to reach out to previous employers to verify employment. 


Being as thorough as possible on the loan application will help lenders verify employment and spot potential issues early before they become more significant problems later. Provide all the salary details from previous jobs as well as contact information for the former employers. 

Mortgage Application Challenge #3: Breaks In Employment

Breaks or gaps in employment are okay as long as there is a reasonable explanation for them and work picks up again.


Write a letter explaining any breaks in your employment background. Be proactive and do this before the lender submits the loan application for approval to underwriting. 

Mortgage Application Challenge #4: Liquid Assets

Homebuyers will need enough cash reserves to pay their escrow fees in cash. Homebuyers should expect to provide current documentation and statements for all the funds that are involved in the transaction. This is where some borrowers can run into issues, specifically if lenders need documentation from any large deposits to the account. 


Homebuyers should remember that if they move money between accounts, lenders will require bank statements to document the deposits. Homebuyers should avoid shifting money around as much as possible while their application is being processed. If homebuyers obtain a large sum of cash from selling a car or other assets, they should be prepared to provide the receipt of the assets sold and the accounts they were deposited into.

Mortgage Application Challenge #5: Gift Funds 

Homebuyers using gift funds from generous relatives will need to have their donor sign a Gift Letter and present a bank statement showing the origin of the gifted funds. Underwriters require Gift Letters from donors that state the gifted funds are intended to purchase a home and never have to be reimbursed.


Homebuyers should review the gift procedure with their donors and make sure they’re aware of the documentation needed. 

Mortgage Application Challenge #6: Past Addresses

The loan application will ask homebuyers to specify all their addresses for a minimum of 24 months. Credit reports will show the same information; however, credit bureaus often have inaccurate previous addresses. 


Homebuyers should carefully review their credit report with their Mortgage Analyst for any address discrepancies and write a Letter of Explanation (LOE) to explain any errors in dates or locations. LOEs should address any differences and be signed and dated by the homebuyer. Being ahead of the curve and addressing these issues early on in the process will help get homebuyers approved for their loans faster.


We know filling out a mortgage application can be challenging for homebuyers in California and Texas, but with a bit of patience, some research, and working with a trusted mortgage lender like JVM Lending, homebuyers will find themselves well on their way to getting pre-approved for their loan.

If you are a homebuyer in California or Texas and have questions about the mortgage application process and how to overcome these challenges, contact JVM Lending today – our team of mortgage experts is happy to help with all your mortgage needs!

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