Background and why it matters
Stress testing borrows a risk-management practice used by banks and applies it to individual borrowers. Lenders already model downside risks during underwriting; doing your own stress test lets you spot and fix issues early, avoid last-minute document requests, and present a cleaner file to underwriters. In my practice I’ve seen applicants who caught avoidable problems (thin reserves, variable income gaps) and changed their timing or savings plan to win better terms.
How to run a practical stress test (step-by-step)
- Gather the documents lenders want: pay stubs, tax returns, bank statements, profit-and-loss statements for self-employed income, and documentation for any nonwage income. See our guide on understanding mortgage underwriting paperwork for common lender requests ([what papers lenders want](
