A big purchase during mortgage underwriting is generally any expense outside normal, daily spending that alters your debt-to-income (DTI) ratio or reduces your cash reserves. Red flags include buying cars, furniture, or appliances on credit, making large cash purchases, or moving large sums of money, which can lead to loan denial or delays.
There isn't a universal definition of what a big purchase is—it is a subjective metric. What is considered a major purchase for one person might be minor to another. Factors influencing this distinction include an individual's income level, their savings and investment portfolio, and their amount of existing debt.
For Conventional a “large deposit” is anything in excess of 50% of the qualifying income. For FHA loans, a large deposit is anything exceeding 1% of the home's value.
Major purchases are items that typically cost more than the average consumer can afford to spend without saving or borrowing. The primary examples of major purchases include buying property and purchasing vehicles, like a car, boat, or mobile home.
Making a big purchase, including furniture
But what is considered a big purchase during underwriting? A new car or boat would certainly raise red flags with lenders. Even furniture or appliances — basically anything you might pay for in installments — is best to delay until after you finalize your mortgage.
The 3-7-3 Rule in mortgages isn't a loan type but a federal timeline from the TILA-RESPA Integrated Disclosure (TRID) rule, ensuring borrower protection by mandating disclosures within 3 business days of application, a 7-business-day wait between the initial Loan Estimate and closing, and another 3-day wait if significant changes (like APR) occur, giving borrowers time to review costs before committing to a loan.
Some examples of a big purchase include:
You should avoid actions that could significantly decrease the cash or assets you have under your name. This means waiting to purchase big-ticket items such as a car, boat, or furniture until after you have completely closed on your mortgage loan.
When you deposit more than $10,000 in cash, the bank is required to file a Currency Transaction Report (CTR) with the U.S. Treasury. That's not a penalty or a sign of wrongdoing; it's just part of federal banking rules. These reports help track large cash movements that might be tied to tax evasion or illegal activity.
For a house priced at $800,000, this means you would need a minimum deposit of $160,000. This 20% deposit reduces the lender's risk and eliminates the need for LMI, which is an insurance policy that protects the lender if the borrower defaults on the loan.
When assessing your affordability, mortgage lenders will usually look at the past 2 – 3 months of bank statements. They may also look further back, from 12 – 24 months if you're self-employed, as this will allow them to assess your average income over a longer period.
Here are 10 things you'll want to AVOID doing during the loan approval process:
The "27.39 rule" (often rounded to $27.40) is a simple financial strategy to save $10,000 in one year by consistently setting aside $27.40 every single day, making it an achievable micro-saving habit to build wealth or an emergency fund. It turns the daunting goal of saving $10,000 into a manageable daily action, emphasizing consistency over large lump sums.
The "20k rule" refers to the traditional IRS threshold for reporting income from payment apps and online marketplaces on Form 1099-K: over $20,000 in gross payments AND more than 200 transactions in a calendar year. While a law (the American Rescue Plan) temporarily lowered the threshold to $600, recent legislation, the One Big Beautiful Bill Act (OBBBA) (OBBBA), has reinstated the $20,000/200-transaction rule for tax years starting in 2025, providing relief for casual sellers and gig workers.
For every account that meets the Form 1099-K requirements, including non-profits, the IRS requires Square to report this information. According to the IRS, gross income is defined as all income from whatever source derived an individual or entity has received throughout the calendar year.
Federal regulations require specific reporting when physical currency deposits into your financial institution exceed certain amounts—not to restrict your deposits, but to help combat money laundering and financial crimes. The key number to remember for 2025 is $10,000.
Large purchases are generally classified as any purchase amount that would put you over 30% of your credit utilization ratio. Due to advancements in fraud detection technology, you do not need to notify your card issuer before making a large purchase.
This simple rule is if you find something you want that is out of your budget, give yourself seven days before you allow yourself to purchase it. After seven days, ask yourself two questions: Do I still really want the item?
Lenders use your income to calculate your debt-to-income (DTI) ratio, which is a key factor in determining your loan eligibility. A lower DTI ratio, supported by a steady income, can help you qualify for a larger loan amount and better interest rates.