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FAQ: How Do 401K Contributions Affect Mortgage Approval?


“We were just pre-approved on a loan and we’ve been very vigilant with our credit, but I need to make changes to my 401k contribution. Is this going to affect our mortgage approval?"

The important thing to keep in mind about being approved for a loan is that lenders are looking for steady and verifiable income and the borrower’s ability to repay the loan. As a borrower, a good rule of thumb is to stay the course with your income, debt and spending.

Although changing the amount you contribute to your 401k will not technically impact the total amount of your income and assets, it will change the amounts in your different accounts (checking, 401k, savings, etc.), so you’ll need to be careful with changing your contribution—especially with how much you’re looking to increase or decrease.

However, with that being said, since you’ve only been pre-approved—and not actually been approved for a loan—making changes to your 401k contributions now shouldn’t have an effect on your loan approval once you do find the home that you want and start the loan application process.

Before you make any changes to your 401k contribution—or to any other aspects of your finances—make sure you talk to the lender and let them know what your plan is so they can redo your pre-approval, if necessary.

Omega Financial+

For 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have more than 60 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. They are located in the Town of Norwood, Massachusetts where they have been operating as Omega Financial Incorporated since 1988. Licensed by the Commissioner of Banks - License No. MB2671

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Licensed by the Commissioner of Banks - License No. MB2671