What Lenders Look For

Last updated: October 20, 2025 • Not financial advice

The Underwriting Pillars

Underwriting balances borrower strength, collateral quality, and structure. Packaging your file against these pillars improves approval odds and pricing. If you’re a first‑time buyer, start with our first‑time financing guide and use the calculator to set a realistic budget.

1) Credit Profile

• FICO and history: Many programs target 700+; exceptions exist with compensating factors.
• Debt metrics: DTI/DSCR and fixed‑charge coverage. Stable, predictable income is valued.
• Public records: Bankruptcies, liens, judgments need clear explanation.

2) Liquidity and Reserves

• Cash & equivalents: Post‑close reserves to cover 6–12 months of payments are common requests.
• Down payment: See down payment norms. 10–25% is typical depending on type and age.
• Other assets/LOCs: Backup liquidity supports risk considerations.

3) Income Quality

• W‑2 vs K‑1/Schedule C/E: Document stability; lenders normalize add‑backs conservatively.
• Business use: If under an entity, lenders may request business financials and tax returns.
• Part 91 vs 135: Charter income adds complexity; some lenders restrict Part 135 usage.

4) Collateral and LTV

• Type, age, time: Newer and liquid models (SR22, TBM, PC‑12, CJ series) are favored.
• Maintenance status: Engine/prop times, logbook completeness, damage history.
• Appraisal/valuation: Lenders may reference Vref/Bluebook, comps, or independent appraisal.

5) Structure

• Term & amortization: Longer amortization lowers payment but increases total interest. See terms & amortization.
• Balloon: Lowers payments with a lump sum at maturity; review balloon pros/cons.
• Rate type: Fixed vs variable affects payment certainty; see rate comparison.

Documentation Checklist

• Two years personal returns (and business returns if applicable); YTD financials.
• Personal financial statement; liquidity proof (bank/brokerage statements).
• Purchase agreement/LOI; aircraft specs; logs summary; recent photos.
• Insurance quote/binder; pilot resume and hours; training/endorsements.
• Entity docs (LLC/Trust), operating agreements, and resolutions if relevant.

Timeline and Process Milestones

1. Initial screening: Budget with the calculator; align down payment and LTV.
2. Term sheet: Provide financials and aircraft details; get conditional offer.
3. Diligence: Appraisal/title/escrow and insurance quoting; pilot training plan.
4. Approval: Finalize covenants, prepayment terms, and usage restrictions.
5. Closing: Execute docs, fund, record liens, update registration.

Red Flags and How to Mitigate

• Limited liquidity: Increase down payment or reduce purchase price; consider more liquid airframes.
• High‑time engines/overdue maintenance: Address items pre‑close or escrow holdbacks.
• Spotty documentation: Organize logs and titles; engage reputable escrow/title services.

Self‑Assessment Rubric

Score yourself 1–5 on each line; 4s and 5s suggest stronger approval/pricing odds.

• Credit depth: 1=thin history, 5=long spotless history.
• Liquidity: 1=just enough down, 5=12+ months of payments in reserve.
• Income stability: 1=volatile/self‑employed without trend, 5=stable multi‑year with cushion.
• Collateral liquidity: 1=thin market, 5=broad/active market (e.g., PC‑12/TBM/CJ).
• Documentation readiness: 1=fragmented, 5=organized binder ready day one.

How to Improve Approval Odds

• Right‑size the ask to your liquidity and income; align payment with budget using the calculator.
• Reduce LTV with a slightly larger down payment or trade‑in.
• Choose popular, liquid models in good maintenance standing.
• Demonstrate a plan for training, insurance qualifications, and hangar arrangements.
• Provide complete, organized documentation up front to avoid back‑and‑forth.

Special Situations

• Older aircraft/high‑time engines: Expect lower LTV caps and tighter terms. Engine reserve plans help.
• International buyers or trusts: Registration/Trust structures add steps; see FAA registry resources.
• Experimental/amateur‑built: Program availability varies; documentation and safety record matter.

FAQs

Next, read our approval tips and compare fixed vs variable rates. Then try scenarios in the calculator.

External references: FAA Registry · AOPA Finance · NBAA

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