Posted On Sep 19, 2025

In my roles both as a Mortgage Agent and as a Product Manager, I have a unique view and insights from both sides of the table. I see the hopes and anxieties of my clients, and I also know the internal conversations that drive a lender's decisions.

While the advice to have a good credit score and a stable income will always be true, the nuances of what lenders are really scrutinizing change with the economic climate. Here in late 2025, with a softer housing market and a shifting rate environment, the focus has sharpened.

Here are three things that are getting a much closer look from underwriters right now, beyond the basic application numbers.

1. The Story Behind Your Income Stability

It's no longer just about the number on your T4. Lenders are digging deeper into the resilience of your income.

  • Sector Scrutiny: Is your income from a sector that's booming or one facing headwinds from recent trade tensions? For example, a software developer at a stable tech firm might be viewed differently than someone in a manufacturing role directly impacted by cross-border tariffs.

  • Variable Income Realism: For sales professionals or hourly workers, lenders are looking for consistency. A single great year followed by a mediocre one might raise more questions than two consistently "good" years. They want to see a sustainable average, not just a recent peak.

  • Future Trajectory: Are you a new professional (like a doctor or lawyer) with a clear and predictable path to higher income? Or are you in a role with a salary cap? This future potential is part of the unspoken risk assessment.

 

What this means for you: Be prepared to explain your job and industry. A note submitted from your mortgage agent explaining the stability and outlook of your role can make a significant difference.

2. The Nature of the Property Itself

Lenders are applying a finer lens to the asset they are financing.

  • Condo Concentration: Lenders are wary of over-concentration in a single building or new development. If they already have significant exposure in a particular condo tower, they may be stricter with their lending criteria (like requiring a larger down payment) for another unit in that same building.

  • Uniqueness and Resale Value: Is the property unique in a way that could limit its resale appeal? A one-bedroom-plus-den is standard; a quirky open-concept loft with no defined bedroom might face more scrutiny. They are always thinking, "If this borrower defaults, how easily can we sell this property?"

  • Rental Potential vs. Reality: For investors, lenders are looking beyond optimistic rental projections. They'll use their own market data, often more conservative than a listing's advertised potential rent, to qualify you.

What this means for you: The property you choose matters more than ever. A standard, easily marketable property will always be the smoothest path to financing.

3. Your Overall Financial Picture and Debt Profile

The stress test is the official hurdle, but the unofficial one is an underwriter’s overall confidence in your financial habits.

  • Source of Down Payment: Lenders still prefer to see a down payment that comes from your own savings over time. While gifted down payments are common and perfectly acceptable, a history of diligent saving tells a powerful story about your financial discipline.

  • Type of Debt: How you manage your other debts is a window into your financial character. A car loan and a modest student loan are viewed differently than maxed-out credit cards and a large unsecured line of credit, even if the total monthly payments are the same. They are looking for signs of responsible credit use, not just a manageable debt ratio.

 

What this means for you: Clean up your credit and financial house well before applying. Consolidating high-interest debt or paying down consumer credit can make your application look much stronger, even if your income remains the same.

Navigating the mortgage process can feel like a black box. But by understanding what lenders are truly looking for behind the scenes, you can position yourself for a smoother, more successful approval. If you want to make sure your application tells the right story, let's connect.

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