{"id":32740,"date":"2018-09-14T15:42:54","date_gmt":"2018-09-14T12:42:54","guid":{"rendered":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/?p=32740"},"modified":"2025-07-10T12:31:53","modified_gmt":"2025-07-10T09:31:53","slug":"how-to-get-pre-approved-for-a-mortgage","status":"publish","type":"post","link":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/2018\/09\/14\/how-to-get-pre-approved-for-a-mortgage\/","title":{"rendered":"How to Get Pre-Approved for a Mortgage"},"content":{"rendered":"\n

This article was updated February 7, 2025<\/em><\/strong><\/p>\n\n\n\n

Although not mandatory, securing a mortgage pre-approval has become an essential step for committed homebuyers, especially in tight housing markets. Plus, knowing how to get pre-approved for a mortgage gives serious homebuyers an edge over potential competitors in the market; offers clarity on the buyer\u2019s purchasing power and timeline; and takes into account how long the preapproval for a mortgage lasts.<\/p>\n\n\n\n

It also leads to smoother and more predictable transactions and a generally more streamlined homebuying process and signals to lenders and sellers that the borrower is a committed and trustworthy individual.<\/p>\n\n\n\n

<\/span>What Is a Mortgage Preapproval?<\/span><\/h2>\n\n\n\n

Mortgage preapproval is a conditional commitment written from a lender (generally in the form of a letter or document) that establishes how much money the lender is willing to allow the buyer to borrow to finance the purchase of a home. A mortgage preapproval signals that the lender is prepared to extend the line of credit as long as the buyer\u2019s financial position does not change significantly.<\/p>\n\n\n\n

During the mortgage pre-approval process, lenders will assess a potential borrower\u2019s income \u2014both amount and sources \u2014 as well as your credit score; assets; other loans and lines of credits, including previous loan defaults; child support or alimony payments; employment history; and more.<\/p>\n\n\n\n

This way, lenders can determine whether you\u2019re a reliable borrower, what type of loans you qualify for and even what interest rates you can borrow at, thereby providing you with a realistic assessment of your current borrowing power.<\/p>\n\n\n\n

<\/span>Mortgage Pre-Approval vs. Mortgage Pre-Qualification<\/span><\/h2>\n\n\n\n

A common buyer mistake is to assume that if you are pre-qualified for a mortgage, then you don\u2019t need to be pre-approved for a mortgage. However, mortgage pre-approval and mortgage pre-qualification are two distinct steps in the homebuying process.<\/p>\n\n\n\n

Most buyers will start the homebuying process by investigating whether they can pre-qualify for a mortgage by providing basic financial information to a mortgage lender. Typically, that includes income, debt and any valuable assets that can be used as collateral.<\/p>\n\n\n\n

This process is generally very quick with online mortgage pre-qualification tools and applications returning results within minutes. However, the estimate that you receive during pre-qualification regarding how much you may be able to borrow often doesn\u2019t include a deep credit check. That means that it won\u2019t affect your credit score significantly, but it also won\u2019t return as accurate of a loan amount as the mortgage pre-approval process will.<\/p>\n\n\n\n

In short, pre-qualification is quick, informal and does not extend any (strong) commitment from the lender.<\/strong><\/p>\n\n\n\n

Conversely, the process of how to get pre-approved for a mortgage is far stricter: It requires a formal application from the borrower and includes extensive financial documentation. At the same time, the lender will conduct a much more detailed investigation of the borrower, including a hard credit check, which may temporarily affect your credit score.<\/p>\n\n\n\n

Mortgage pre-approval is also a longer process lasting at least a few days, although it can be as long as week or more. Even so, the conditional loan approval provides a much more exact credit amount that\u2019s far more reliable and helps sellers consider you as a serious buyer.<\/p>\n\n\n\n

Essentially, pre-approval is a formal process that can last up to a week (or more) but extends a conditional loan approval and marks you as a serious buyer with the necessary funds to purchase a home.<\/strong><\/p>\n\n\n\n

<\/span>How to Get Pre-Approved for a Mortgage<\/span><\/h2>\n\n\n\n

Knowing how to get pre-approved for a mortgage before you decide on a home will streamline your loan approval process and increase your chances of buying your dream home. You can start preparing before you even submit your pre-approval application by thoroughly reviewing your credit score and current loan load.<\/p>\n\n\n\n

First, check your credit score by getting credit reports from all three major credit bureaus (Equifax, Experian and TransUnion). If you\u2019re interested in getting pre-approved for a mortgage online, you can secure your credit reports for free online at AnnualCreditReport.com<\/a> in accordance with federal guidelines.<\/p>\n\n\n\n

Then, after you\u2019ve received reports from the three major credit bureaus, review the reports and see what you can change in your financials to increase your score if needed (or possible). Lenders will typically require a score of at least 620, but higher scores increase your chances to get pre-approved for a mortgage, while also increasing the credit amount extended to you by lenders and potentially reducing your loan rate.<\/p>\n\n\n\n

What are the main steps to get pre-approved for a mortgage?<\/h3>\n\n\n\n

There are three main steps to getting successfully pre-approved for a mortgage \u2014 gathering all financial documents; determining your budget and debt-to-income ratio; and submitting your pre-approval letter.<\/p>\n\n\n\n

1. Compile Your Financials<\/strong><\/p>\n\n\n\n

Your financial status is the primary factor of your potential approval. There are three main areas to gather documentation for \u2014 income, assets and debt. Generally, these three areas will cover two of the so-called \u201c3 Cs of mortgage loans\u201d \u2014 capacity and credit. For most borrowers, the third C, collateral, will be represented by the home that the borrower is looking to buy, but other high-value assets included in the application may also be considered as collateral.<\/p>\n\n\n\n

Income verification: <\/strong>Gather all recent paystubs, W2 forms, tax returns for the last two years, and any other valid revenue streams, such as income from rental properties or trust funds.<\/p>\n\n\n\n

Debt information: <\/strong>List and document any current debt you may have, including student loans; other mortgages; car loans; credit card debt; and any mandatory recurring payments, such as alimony or child support. <\/p>\n\n\n\n

Proof of assets: <\/strong>Gather bank statements of all accounts, including shared accounts; retirement funds; investments funds; and high-value assets, such as potential rental properties.<\/p>\n\n\n\n

2. Determine Your Budget<\/strong><\/p>\n\n\n\n

Determining an accurate budget is key to knowing how to get pre-approved for a mortgage. That\u2019s because not only does it streamline the process, but it also prevents you from getting attached to properties that you can\u2019t afford at the moment.<\/p>\n\n\n\n

Many banks and other types of lenders and financial institutions offer free online calculators that can help you estimate what and how much you can afford by estimating monthly mortgage payments, property taxes, insurance payments, maintenance costs, closing costs, and even real estate transfer taxes and utility bill estimates.<\/p>\n\n\n\n

While you\u2019re at it, determine your debt-to-i<\/a>n<\/a>come ratio<\/a>. Most lenders typically look for a debt-to-income ratio of no more than 43% at the highest end. The lower the ratio, the higher your pre-approval and approval chances.<\/p>\n\n\n\n

3. Submit Your Pre-Approval Application to Your Chosen Lender<\/strong><\/p>\n\n\n\n

Start by thoroughly researching lenders in your area to determine which offers the best terms and rates for you. You might also consider researching specialized lenders, such as those that focus on rural homes and farms or co-op loans, whereas others only extend typical loans or offer a wide variety of home loans. Also check online reviews and ask acquaintances (especially those who have recently bought a home or refinanced a loan) for personal recommendations.<\/p>\n\n\n\n

What items do you need to get pre-approved for a mortgage? <\/h3>\n\n\n\n

When submitting your application to get pre-approved for a mortgage, make sure to include:<\/p>\n\n\n\n