Mortgage Pre-Approval: Speed Up Your Home Buying

Mortgage pre-approval is a lender’s written commitment to lend you a specific amount based on verified income, assets and credit. It typically takes 1-3 days to receive and remains valid for 60-90 days. Pre-approval requires a credit check, income documentation and asset verification—unlike pre-qualification, which is just an estimate based on self-reported information.

Pre-Approval vs. Pre-Qualification: What’s the Difference?

Many buyers confuse these terms. The difference matters.

Pre-Qualification

What it is: A quick estimate of what you might qualify for

Based on: Self-reported information (income, debts, assets)

Verification: None

Credit check: Usually not (soft pull at most)

Time to receive: Minutes to hours

Value to sellers: Minimal—anyone can get pre-qualified

Pre-Approval

What it is: A conditional commitment to lend you money

Based on: Verified income, assets and credit

Verification: Full document review

Credit check: Yes (hard pull)

Time to receive: 1-3 business days

Value to sellers: Strong—shows you’re a serious, qualified buyer

Which Do You Need?

For house hunting, get pre-approved. Pre-qualification is essentially meaningless to sellers. In competitive markets, offers without pre-approval letters often aren’t even considered.

Why Pre-Approval Matters

Competitive Advantage

In multiple-offer situations, sellers compare buyers. A pre-approved buyer:

Has verified financing
Can close quickly and reliably
Represents less risk of deal falling through

Jennifer Walsh submitted an offer $5,000 below the highest bidder. The seller chose her because she was pre-approved while the higher bidder only had pre-qualification.

Know Your Real Budget

Pre-approval reveals exactly what you can afford based on your actual financial situation—not estimates or online calculators. This prevents:

Falling in love with homes you can’t afford
Wasting time on properties outside your range
Surprises during underwriting

Faster Closing

Much of the loan work happens during pre-approval. When you find a home, the lender already has:

Your credit pulled and reviewed
Income and employment verified
Assets documented
Debt-to-income calculated

This can shave 1-2 weeks off closing time.

Identify Problems Early

Pre-approval uncovers issues that could derail your purchase:

Credit problems you didn’t know about
Income documentation gaps
DTI too high for your target price range
Assets that need explanation

Better to discover these before you’re under contract with deadlines.

How to Get Pre-Approved

Step 1: Gather Your Documents

Income documentation:

2 years of W-2s
2 years of federal tax returns (all pages)
30 days of pay stubs
If self-employed: 2 years business tax returns + profit/loss

Asset documentation:

2-3 months bank statements (all pages, all accounts)
Investment account statements
Retirement account statements
Gift letter (if using gift funds)

Identity and other:

Government-issued ID
Social Security number
Current address and 2-year address history
Landlord contact (for rent verification)

Step 2: Choose Lenders to Apply With

Apply with multiple lenders to compare rates and fees. All mortgage inquiries within 14-45 days count as one inquiry for credit scoring.

Lender options:

Banks (existing relationship may help)
Credit unions (often lower rates)
Mortgage brokers (shop multiple lenders for you)
Online lenders (fast processing, competitive rates)

Step 3: Complete Applications

Each lender will have you complete a Uniform Residential Loan Application (Form 1003). You’ll provide:

Personal information
Employment history (2 years)
Income details
Asset information
Property type you’re seeking
Loan amount requested

Step 4: Submit Documentation

Upload or deliver your documents. Respond quickly to any requests for additional information—delays here slow down your pre-approval.

Step 5: Receive Pre-Approval Letter

Within 1-3 business days, you’ll receive:

Pre-approval letter stating your approved amount
Loan estimate showing rate, fees and terms
List of any conditions

What Lenders Look At

Credit Score and History

Your credit determines:

Whether you qualify
What rate you’ll receive
Which loan programs are available

Minimum scores by loan type:

Conventional: 620
FHA: 580 (500 with 10% down)
VA: No minimum, but 620 typical
USDA: 640

What hurts your approval:

Recent late payments
High credit utilization (over 30%)
Collections and charge-offs
Bankruptcy or foreclosure (timing matters)

Income and Employment

Lenders verify:

Stable employment (2+ years preferred)
Sufficient income for proposed payment
Likelihood income will continue

Red flags:

Recent job changes to different field
Declining income
Employment gaps without explanation
Commission/bonus income without 2-year history

Assets and Down Payment

Lenders confirm:

You have funds for down payment
You have funds for closing costs
Source of funds is acceptable
You have reserves (for some loans)

Acceptable sources:

Personal savings
Gift from family (with documentation)
Retirement account withdrawal
Down payment assistance programs
Sale of assets (with paper trail)

Debt-to-Income Ratio

Your DTI compares monthly debts to gross income:

Front-end (housing only): Typically under 28%
Back-end (all debts): Typically under 43-45%

Higher DTI requires compensating factors like excellent credit or significant reserves.

Pre-Approval Letter Explained

What It Contains

A typical pre-approval letter includes:

Lender’s name and contact info
Your name(s)
Maximum loan amount approved
Loan type (conventional, FHA, etc.)
Expiration date
Conditions and contingencies

What It Doesn’t Guarantee

Pre-approval is conditional. Final approval depends on:

Property appraisal meeting value
Property meeting loan requirements
No material changes to your finances
Clear title
Satisfactory home inspection (for your protection)

Using Your Pre-Approval Letter

Include with offers: Sellers want to see it

Request amount flexibility: Get a letter for slightly less than max to avoid appearing stretched

Update as needed: If letter expires before you buy, request a new one

How Long Does Pre-Approval Last?

Standard Validity

Most pre-approval letters expire in 60-90 days.

Why They Expire

Credit can change
Employment situations change
Interest rates fluctuate
Financial circumstances evolve

Renewing Pre-Approval

If your letter expires:

Contact your lender
Provide updated documents (recent pay stubs, bank statements)
Allow new credit pull
Receive updated letter

The renewal process is faster than initial pre-approval since most information is already on file.

Common Pre-Approval Mistakes

Mistake 1: Changing Jobs

New employment complicates approval. Stay in your current job until after closing, especially if:

Moving to a different field
Going from salary to commission
Starting a business
Taking a lower-paying position

Mistake 2: Making Large Purchases

Buying a car, furniture or appliances before closing can:

Increase your DTI
Adds to your total debt
Could disqualify you from your home purchase
Create new credit inquiries
Jeopardize your approval

Wait until after closing for major purchases.

Mistake 3: Moving Money Around

Large deposits require explanation and documentation. Before pre-approval:

Avoid large cash deposits
Keep funds in documented accounts
Maintain paper trails for all transfers

Mistake 4: Opening or Closing Credit Accounts

New accounts: Create inquiries and lower average account age

Closed accounts: May increase credit utilization ratio

Keep credit activity minimal from pre-approval through closing.

Mistake 5: Co-Signing for Others

Co-signing makes you responsible for someone else’s debt. That debt counts in your DTI and could disqualify you.

Pre-Approval Timeline

Before Pre-Approval (1-3 months)

Check your credit reports for errors
Pay down credit card balances
Gather documents
Save for down payment and reserves

Pre-Approval Process (1-3 days)

Submit applications to multiple lenders
Provide documentation
Receive pre-approval letters
Compare offers

House Hunting (varies)

Shop with confidence knowing your budget
Make competitive offers with pre-approval letter
Update pre-approval if it expires

Under Contract to Closing (30-45 days)

Final loan application
Appraisal and inspections
Underwriting and conditions
Clear to close and fund

Frequently Asked Questions

Does pre-approval hurt your credit?

Yes, slightly. The hard inquiry typically drops your score 5-10 points temporarily. However, multiple mortgage inquiries within 14-45 days count as one inquiry, so shop multiple lenders.

Can you be denied after pre-approval?

Yes. Pre-approval is conditional. You can be denied if: the appraisal comes in low, your financial situation changes, you make large purchases, you change jobs, or issues arise during underwriting.

How many times can you get pre-approved?

As many as needed. You can apply with multiple lenders simultaneously (all count as one inquiry) and renew pre-approval when it expires. There’s no limit.

Should I get pre-approved before looking at homes?

Yes. Pre-approval should be your first step. It tells you what you can afford, makes your offers competitive and identifies any issues before you’re under contract with deadlines.

What’s the difference between pre-approval and final approval?

Pre-approval is conditional—based on your finances before you have a specific property. Final approval (clear to close) comes after the appraisal, title work and complete underwriting review on a specific property.

Can I switch lenders after pre-approval?

Yes. Pre-approval doesn’t commit you to that lender. Many buyers get pre-approved with one lender, then shop rates again before making an offer. However, switching very late in the process can delay closing.

How much does pre-approval cost?

Most lenders offer free pre-approval. Some charge for the credit report ($30-$50) or appraisal deposit (refundable if you don’t proceed). Avoid lenders charging significant upfront fees for pre-approval.

Get pre-approved for a mortgage in just a few days.