From what I have seen with mortgage denials is the following:
1) Big box bank LO doesn't calculate the DTI ratios at time of app and wastes everyones time by having the underwriter deny for ratios 
In some cases, this can be fixed if you go to another lender without the strict overlays that big box banks have now. What is irritating to me as a Realtor is that this is a calculation that can be done in 15 minutes and the LO pushes through underwriting and takes 30 days before they deny.
2) Income is different from the mortgage application. For example, borrower is a W-2 type employee and they take tax deductions as if self-employed so the tax returns reflect a much lower income and a higher DTI. If it is too high, than the borrower doesn't qualify for the requested loan.
3) Borrower has change of circumstance during the loan process:
- job loss
- income reduction
- something else (see below)
4) Borrower runs out and buys things during the mortgage loan process (furniture for example) killing their DTI and running up debt. I saw this once where the buyer wanted to torpedo a purchase and went out and purchased a jetski on payments knowing that his DTI was already tight.
5) Insurance cost comes in too high (not by borrowers doing, but because of the property). This is a specific issue in my area of S Florida. It can kill a mortgage. Most of the time a LO in my area uses an average cost of $2400 to $3000 per year for homeowners insurance. If the property insurance comes in at a higher amount it will tank the sale on that particular property if the buyer doesn't have the room in his total debt ratio (or even in the housing ratio).
6) Fraud. I haven't seen this personally but have heard horror stories from a couple of LO's.
@StartingOver10 wrote:From what I have seen with mortgage denials is the following:
1) Big box bank LO doesn't calculate the DTI ratios at time of app and wastes everyones time by having the underwriter deny for ratios
2) Income is different from the mortgage application. For example, borrower is a W-2 type employee and they take tax deductions as if self-employed so the tax returns reflect a much lower income and a higher DTI. If it is too high, than the borrower doesn't qualify for the requested loan.
3) Borrower has change of circumstance during the loan process:
- job loss
- income reduction
- something else (see below)
4) Borrower runs out and buys things during the mortgage loan process (furniture for example) killing their DTI and running up debt. I saw this once where the buyer wanted to torpedo a purchase and went out and purchased a jetski on payments knowing that his DTI was already tight.
5) Insurance cost comes in too high (not by borrowers doing, but because of the property). This is a specific issue in my area of S Florida. It can kill a mortgage. Most of the time a LO in my area uses an average cost of $2400 to $3000 per year for homeowners insurance. If the property insurance comes in at a higher amount it will tank the sale on that particular property if the buyer doesn't have the room in his total debt ratio (or even in the housing ratio).
6) Fraud. I haven't seen this personally but have heard horror stories from a couple of LO's.
+1 I'm a Realtor also and those are the biggest killers.....#1 is people look for the most deductions on their taxes and don't realize when it comes to a mortage it goes by the AGI but like you said most LO will write the pre-approval based off Gross Income and that number isn't realistic for what you pocket
...And insurance.....This right also is a big killer....it almost cost us our loan in underwriting...quoted $1380/annually which was $200 over the estimate used...The LO wanted us to use his "preferred insurance" company until I checked the cover, had no water back coverage or sump pump coverage...I'm not stupid...the moment I seen that I knew it was just a push to get us through underwriting and the moment we closed we would have got that new bill much higher and it would have caused our annual escrow amount to jump further increasing the mortgage payments....I paid out of pocket with the insurance company I've had for years.
@Anonymous wrote:
@Anonymous are normal. I'm going FHA, supposed to close on 3/30. I went to UW twice in a period of a month! Everyday they needed something signed or a copy of something certified! I swear it would've been easier to just turn my life over to them! I JUST received my clear to close last night @8pm. Try not to fret. This is a hard and long process but the reward is worth it! Good luck!
Congrats...Clear to close is good...You're 99% of the way there 
I think mine went a little smoother since I was already all over them...I faxed my LO so much stuff and secure emailed it...When he was asking for stuff I was like check the email dated xxxx you already have it.