Mortgage Preapproval: How to Get Preapproved and What Lenders Check

A mortgage preapproval is a lender's written, conditional commitment to lend you up to a certain amount, based on a review of your credit report and documents verifying your income, assets and debts. It shows you a realistic price range and signals to sellers that you can likely get financing. Final approval still depends on the home and underwriting.

Here is what a preapproval involves, what you need to apply, and how to use it well.

Preapproval vs prequalification

The two terms are often used loosely, and lenders do not all define them the same way. In general:

Because the labels vary, ask any lender exactly what they reviewed. A letter backed by verified income and assets carries more weight than one based on a phone conversation.

What lenders check for a mortgage preapproval

Lenders look at the same core factors they will use for final approval:

• Credit history and score: your payment record, balances and derogatory marks, which affect both eligibility and pricing.
• Income and employment: stability and amount, typically with a history of about two years for many borrowers.
• Debt-to-income ratio: your projected housing payment plus other monthly debts compared with gross income.
• Assets: money for the down payment, closing costs and any required reserves, and where it came from.
• Loan type and down payment: which programs you fit, such as conventional, FHA, VA or USDA.

If you want to estimate your own ceiling first, our guide to how much house you can afford shows how the 28/36 rule works with a worked example.

Documents you need to get preapproved

Having these ready can shorten the process considerably. Requirements vary by lender and loan type, but most will ask for:

1. Government-issued photo ID
2. Recent pay stubs, often covering the last 30 days
3. W-2s for the past two years, or tax returns if you are self-employed or have variable income
4. Recent bank and investment account statements, often two months
5. Details on current debts, such as car and student loans
6. Explanations of any large deposits, gaps in employment or credit issues
7. A gift letter if a relative is contributing to your down payment
8. For VA loans, a Certificate of Eligibility

Self-employed borrowers may also need profit and loss statements and business tax returns.

How to get preapproved, step by step

1. Check your credit reports. Fix errors and pay down card balances if you can before applying.
2. Decide on a comfortable budget. Know your own target payment so a high approval amount does not tempt you.
3. Choose several lenders. Consider banks, credit unions and mortgage brokers or online lenders.
4. Apply within a short window. Submit applications close together to limit credit score impact.
5. Compare Loan Estimates. Look at the rate, APR, points and lender fees on the same loan type and term.
6. Get your preapproval letter. Ask for letters tailored to each offer amount if needed, so sellers do not see your maximum.

Why comparing lenders matters

Rates and fees can differ meaningfully from one lender to another for the same borrower. The Loan Estimate is a standardized three-page form, so it is designed for side-by-side comparison. Our guide to closing costs explains what each section of the Loan Estimate means.

Where to get preapproved

You can seek preapproval from several kinds of lenders, and it pays to include more than one type:

• Banks may offer relationship discounts to existing customers.
• Credit unions are member-owned and sometimes have competitive fees.
• Mortgage brokers compare offers from multiple wholesale lenders on your behalf, for a fee that is disclosed on your Loan Estimate.
• Online and nonbank lenders often offer fast applications and digital document upload.

No single type is always cheapest, so compare actual Loan Estimates.

How long a preapproval lasts

Many preapproval letters are good for roughly 60 to 90 days, though some lenders use shorter or longer periods. If you have not found a home in that time, the lender will generally ask for updated documents and may pull credit again. A preapproval is not a rate lock; your rate is usually locked only once you have an accepted offer, and even then for a set period.

How to protect your preapproval until closing

A preapproval is conditional. Changes to your finances between now and closing can undo it.

Other things that can derail approval:

• The home appraises for less than the purchase price
• The property has condition issues the loan program will not accept
• Your documents raise questions that underwriting cannot resolve
• Missed payments or new collections appear on your credit

Using your preapproval when you make an offer

Include your preapproval letter with your offer. In competitive markets, some sellers and agents may call the lender to confirm your file is strong, so choose a lender that is responsive. Tailor the letter to your offer price when possible, so the seller does not see you could pay more.

If you are just getting started, our first-time home buyer guide shows where preapproval fits in the whole process, and our overview of types of mortgages can help you decide which program to request.

The bottom line

Get preapproved before you tour homes seriously. Gather your documents, apply with several lenders in a short window, and compare Loan Estimates on equal terms. Then keep your finances steady so the preapproval turns into a final approval at closing.