Mortgage Preapproval: What It Is and How to Get It

Before you start touring homes seriously, it helps to know how much a lender is willing to lend you. A mortgage preapproval gives you a realistic budget and shows sellers you are a serious buyer. Here is how the process works.

Prequalification versus preapproval

Lenders use these terms differently, so ask exactly what you are getting. In general:

• Prequalification is often a quick estimate based on information you provide, sometimes without verifying documents.
• Preapproval usually involves the lender reviewing your credit and verifying income, assets and debts, then issuing a letter stating an amount you may be able to borrow, subject to conditions.

Neither is a final loan approval. Final approval comes after you have a signed purchase contract, an appraisal and full underwriting.

Documents lenders commonly request

• Government-issued ID
• Recent pay stubs
• W-2s and possibly tax returns for the past two years
• For self-employed borrowers: tax returns, profit and loss statements and business documents
• Bank and investment account statements
• Information about debts such as car loans, student loans and credit cards
• Explanation of any large deposits, and gift letters if family is helping with the down payment

What lenders look at

Credit

Your credit history and scores affect whether you qualify and the interest rate you are offered. Check your reports at AnnualCreditReport.com before applying and dispute any errors.

Debt-to-income ratio

Lenders compare your monthly debt payments, including the estimated new mortgage payment, to your gross monthly income. Lower ratios generally make approval easier. Paying down debt before applying can help.

Down payment and reserves

Lenders verify that you have funds for your down payment and closing costs and may look for additional reserves.

Employment and income stability

A steady work history helps. If you recently changed jobs or have variable income, be prepared to explain.

Shop around

Rates and fees can differ significantly between lenders. Consider getting quotes from several types of lenders, such as banks, credit unions and mortgage brokers. Under federal rules, when you apply you should receive a standardized Loan Estimate that makes comparison easier. The CFPB offers a guide to reading a Loan Estimate.

Credit scoring models generally treat multiple mortgage inquiries within a short shopping window as a single inquiry, so comparing lenders within a focused period usually has limited impact on your score.

Preapproval amount versus comfortable budget

The amount a lender preapproves is the maximum they are willing to lend, not necessarily what you should spend. Build your own budget that includes property taxes, insurance, HOA dues, maintenance and your other goals. Use our mortgage calculator to test different prices and down payments.

How long does a preapproval last?

Preapproval letters typically have an expiration date, often a few months. If yours expires, the lender may need updated documents. Rates are not usually locked at preapproval; rate locks typically happen after you have an accepted offer.

Mistakes to avoid after preapproval

• Opening new credit cards or loans
• Making large purchases on credit, such as a car or furniture
• Changing jobs without talking to your lender
• Moving large sums of money between accounts without documentation
• Missing payments on existing bills

Lenders often recheck credit and employment before closing, so keep your finances steady until the loan funds.

Explore assistance programs

If you are a first-time buyer, you may qualify for down payment or closing cost assistance. Learn more in our guide to first-time homebuyer programs.

Frequently asked questions

Does preapproval guarantee a loan?

No. It is conditional. The property must appraise and meet lender requirements, and your financial situation must stay consistent.

Do I need a preapproval to make an offer?

Not legally, but many sellers and agents expect one, especially in competitive markets.