But lie on your mortgage application and you'll risk losing your home if you can’t pay your loan. And, mortgage fraud is a federal crime in the U.S. that can get you up to 30 years in prison and up to $1 million in fines.

There are loads of ways you can fudge your application, but here are four of the most common — and the reasons you should really avoid them.

1. Saying a down payment loan is a gift

Close up shot of female hands holding a small gift wrapped with pink ribbon. Small gift in the hands of a woman indoor. Shallow depth of field with focus on the little box.
Rido / Shutterstock

Homebuyers who have trouble making a down payment on their own may ask to borrow money from a relative.

But when you apply for a mortgage, all existing debts — including money owed to family — are evaluated by the lender. The lender wants to know that you can afford to take on a home loan, too.

Some applicants might be tempted to submit a phony "gift letter" claiming that a loan is really a gift that won't have to be paid back. That way, they can qualify for a bigger mortgage and buy a larger home.

If this deception is discovered, everyone involved could potentially be prosecuted for committing fraud.

Bill Gates made a splash in 2017 when he bought $520 million worth of U.S. farmland, and he’s continued to invest since. What’s in it for Gates?

Read More

2. Telling whoppers about your work history

Distrustful businessman holding document at meeting, looking at partner with doubt suspicion
fizkes / Shutterstock

Typically, lenders want to see that a mortgage applicant has had two years of steady employment, since this implies reliable income and presents less risk of that a homebuyer will default on a loan.

Some applicants embellish their employment records to claim longer employment periods and higher earnings, or they may even say — falsely — that they own a small business.

None of this messing with the truth is likely to work, since lenders will ask to look at tax returns or records that confirm actual income and tax payment history.

Even if the fibbing isn’t found out right away, it could cause problems later if the homebuyer winds up with a mortgage that's too much to handle. Owners can lose their homes and seriously damage their credit history.

3. 'Forgetting' about a few debts

Forgetful absent-minded man is trying to remember something  that he managed to forget.
igorstevanovic / Shutterstock

Debt-to-income ratio is a big part of how a lender determines a buyer's eligibility for a home loan.

Some people try to leave a few debts off their mortgage application, so it looks like they owe less than they do or that they have lower existing monthly debt payments.

But this tactic rarely works.

Mortgage brokers and lenders always run a credit check, and any debt — including car loans, student loans, medical bills, personal loans and old credit cards — will be discovered immediately.

It seems like a tricky time to get into real estate, and being a landlord isn't as passive as you think. Look at these low-stress options instead.

Read More

4. Not being truthful about who's borrowing

Adult smiling man helping friend to fill banking document indoor
Iakov Filimonov / Shutterstock

Sometimes, friends or relatives may claim they're a joint borrower on a mortgage, if an applicant wouldn't qualify alone. If they really want to help things along, these sham co-borrowers may say they will live in the home and help pay the mortgage.

But fudging about this is a terrible idea.

When your name is on a loan, even if you think you're not really a borrower and won't be making payments, the loan will still be listed as an obligation on your credit report.

If your ever want to buy your own home or take out a big loan, you'll be limited by the additional debt. You'll also be liable if the person living in the home fails to keep up the mortgage payments.

Are you thinking about saving? Well, stop thinking about it!

Take the change out of your piggy bank and make it work for you.

Acorns is a financial wellness tool that automatically rounds up your card purchases to the nearest dollar and puts those savings into an investment account. It takes the worrying out of investing and matches you with one of five investment portfolios.

Take five minutes to sign up for Acorns today and collect a $10 bonus.

About the Author

Esther Trattner

Esther Trattner

Freelance Contributor

Esther was formerly a freelance contributor to MoneyWise.

What to Read Next

Looking For Passive Income? There's One Option Right Below Your Feet

One company’s innovative approach makes farmland investing easier and more accessible.

What is a mortgage?

Yes, a mortgage is a big deal, but it's probably not as complicated as you think.

Want to Earn Big Returns Without the Shaky Stock Market? Try Art

Art investment is no longer reserved for the wealthy

States and cities are the new source of pandemic stimulus — is money available where you live?

There’s a catch: Critics say the relief to help with high prices could have an unintended downside.


The content provided on MoneyWise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.