MBA CRU common mistakes
MBA CRU · Understand the traps and how to avoid them.
Reading a self-employed borrower's net profit line and using it as qualifying income without adding back non-cash deductions (depreciation, amortization, depletion) or subtracting non-deductible add-backs (meals, penalties).
The tax return is treated as a single income figure rather than a reconciliation exercise; candidates under time pressure grab the bottom line and move on, and they have not internalized which Schedule C and Form 1120 lines are cash versus non-cash.
What to do instead
Build a standard worksheet every time: start with net profit, add back depreciation, amortization, depletion, and business use of home only where the form supports it, then deduct non-deductible items and sole-proprietor health insurance. Show the arithmetic on scratch paper so a reviewer could follow it, and practice until the add-back list is automatic.
Averaging or annualizing variable income (bonus, commission, overtime, seasonal earnings) without checking the two-year history, the trend direction, and whether the current year-to-date figure supports continuation.
Candidates see a large W-2 box 1 and assume it is stable; they skip the comparison of year over year and the YTD paystub, which is where declining or one-time income shows up.
What to do instead
For every variable component, document three numbers: prior year, current year, and YTD annualized. Use the lower of the averaged figure or the current YTD pace when the trend is declining, and write one sentence justifying the income used. If a large bonus is non-recurring, exclude it and note why.
Treating rental income at face value from Schedule E without applying the vacancy/maintenance factor or netting the full PITI on the subject property, and without distinguishing departing-residence rental from an investment property.
Schedule E shows a single net line, and candidates forget that the underwriter must gross up rents and then apply the appropriate expense treatment, and that a departing residence has different reserve and equity requirements than a pure investment property.
What to do instead
Memorize the two paths: rental income on a departing residence is typically counted at 75% of gross rents with the full housing payment offset, while investment property uses the applicable net rental approach. Always show gross rents, the factor applied, and the offsetting payment as separate lines so the treatment is visible.
Calculating a borrower's total debt ratio using only the debts that appear on the credit report, ignoring obligations disclosed on the application, deferred student loans, co-signed debts, and lease payments.
The credit report feels authoritative and complete, so candidates stop there; they do not cross-check the 1003 liabilities section or read the student loan tradeline for deferment status.
What to do instead
Reconcile three sources line by line: credit report, application, and any divorce decree or support order. Add deferred student loans at the documented payment or the applicable percentage of balance, include co-signed debt unless documented as paid by the other party, and count leases for the remaining term. Recompute the ratio after every addition.
Accepting a gift letter as sufficient documentation of down payment funds without verifying the transfer, the donor's ability to give, and whether the funds are actually sourced rather than borrowed.
The gift letter is a one-page document that looks like a checkbox; candidates file it and move on without matching the deposit to the donor's account statement or checking for a matching withdrawal.
What to do instead
Require three linked artifacts: signed gift letter stating relationship and no repayment, donor account statement showing the funds and the withdrawal, and borrower statement showing the deposit. Confirm the amounts and dates align. Flag any gift from a party with an interest in the transaction or any round-number deposit with no paper trail.
Missing that a large or unusual deposit in an asset account is unsourced, and simply counting the ending balance toward reserves.
Candidates focus on the bottom-line balance because that is what the reserves test uses, and they do not scan the statement for deposits that exceed a normal payroll pattern.
What to do instead
Do a deposit-by-deposit scan of the most recent two months: tag each deposit as payroll, transfer, sale of asset, gift, or unknown. Any unexplained deposit must be sourced or excluded from the funds total. Then verify reserves against the correct basis (PITI, or the applicable payment measure) using only verified funds.
Applying an automated underwriting recommendation as a substitute for the credit and capacity analysis, rather than reading the findings for conditions and layered risk factors.
An approve/eligible result feels like a finish line, so candidates skip the findings messages that flag high debt ratios, limited reserves, or disputed accounts.
What to do instead
Treat the findings as a checklist: extract every condition and message, map each to a document in the file, and note any layered-risk combination (high ratio plus low reserves plus cash-out). If the recommendation is a refer, identify which specific factor drove it before deciding the file is approvable.
Documenting self-employment or a business entity without confirming the borrower's ownership percentage and the business's ongoing existence, using only a paystub or a verbal statement.
Candidates assume the tax return proves the business is active and that the borrower owns it wholly; they skip the business license, CPA letter, or entity documents that establish ownership share and continuity.
What to do instead
For any self-employed borrower, obtain the ownership percentage from the tax return, entity documents, or a CPA letter, and verify the business is still operating through a current license, website, or CPA confirmation. If ownership is below 100%, qualify only the borrower's proportionate share of business income.
Misreading the appraisal by accepting the sales comparison approach at face value without checking that the comparables are truly similar in location, condition, and date of sale, and without reconciling the cost and income approaches where relevant.
The appraised value is a single number at the bottom of the report; candidates do not read the adjustment grid, the effective date, or the appraiser's comments about deferred maintenance and market trends.
What to do instead
Read the grid: confirm at least three closed sales within the required time frame, check net and gross adjustment percentages, and note the effective date versus the application date. For properties where the income approach applies, verify the rent and cap rate assumptions. Flag any appraisal where the value rests on a single comparable or where adjustments exceed typical ranges.
Losing track of the occupancy and property-type rules, such as treating a second home as a primary residence or counting a non-warrantable condo as eligible without checking project approval.
Occupancy and property type are set early on the application and then never revisited, so a later document (lease, insurance policy, condo questionnaire) that contradicts the stated occupancy gets ignored.
What to do instead
At file review, re-confirm occupancy against the insurance declarations, lease agreements, and tax filing address, and confirm project eligibility from the condo questionnaire or project approval status. If any document conflicts with the stated occupancy or property type, resolve it in writing before pricing or approval.