What Is Mortgage Pre-Approval?
Mortgage pre-approval is a lender's commitment to loan you a specific amount of money based on your financial profile. Unlike pre-qualification, which is informal, pre-approval involves a thorough review of your credit, income, assets, and debt.
Key Fact: 86% of home sellers want to see a pre-approval letter before considering your offer seriously.
5 Steps to Get Pre-Approved Fast
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1
Gather Financial Documents
Collect recent pay stubs (2 months), W-2s (2 years), bank statements, tax returns, and ID. Have them ready before contacting lenders.
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2
Check Your Credit Score
Review your credit report at AnnualCreditReport.com. Aim for 620+ (FHA) or 740+ (conventional). Dispute any errors immediately.
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3
Compare Multiple Lenders
Contact 3-5 lenders to compare rates and fees. Banks, credit unions, and online lenders all offer different terms.
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4
Complete the Application
Fill out the Uniform Residential Loan Application (Form 1003) accurately. Errors delay the process by days.
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5
Receive Your Pre-Approval Letter
Within 1-3 business days, you'll get a letter showing your approved loan amount and terms. This is valid for 60-90 days.
What Lenders Review During Pre-Approval
| Factor | What They Look For | Typical Range |
|---|---|---|
| Credit Score | Payment history, credit utilization, age of accounts | 620-850 |
| Debt-to-Income Ratio | Total monthly debt vs. gross income | ≤43% |
| Down Payment | Savings history and source of funds | 3-20% |
| Employment | Stable income for past 2 years | Verified |
| Assets | Bank accounts, investments, retirement funds | Verified |
Pre-Approval Timeline
Most lenders can pre-approve you in 1-3 business days if you submit all documents immediately. Here's what to expect:
- Day 1: Submit application and documents online or in person
- Day 1-2: Lender reviews application, orders credit report, verifies employment
- Day 2-3: Underwriter reviews file and may request additional items
- Day 3: Conditional approval issued; you receive pre-approval letter
Pre-Approval vs. Pre-Qualification vs. Final Approval
Pre-Qualification
Informal estimate based on self-reported info. Takes minutes. Not verified. Carries no weight with sellers.
Pre-Approval
Verified commitment based on credit check and documents. Takes 1-3 days. Shows sellers you're serious. Valid 60-90 days.
Final Approval
Full underwriting after offer accepted. Includes property appraisal. Takes 7-10 days. Required to close.
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