Buying a home is exciting—but also competitive. In many markets, it’s not enough to find the right house. You also need to make a strong offer that sellers take seriously.
That’s where mortgage preapproval comes in. It shows you’re financially ready to buy and can give you a real advantage when bidding on a home. This guide walks you through exactly how to get preapproved, what lenders look for, and how to avoid common mistakes along the way.
What is mortgage preapproval?
Mortgage preapproval is a lender’s conditional commitment to let you borrow a specific amount for a home purchase. It’s based on a full review of your finances, including your credit score, income, debts, and assets.
Getting preapproved means a lender has verified your information and decided you meet the requirements for a loan—at least on paper. You’ll receive a preapproval letter showing the maximum loan amount you qualify for. This letter signals to sellers and real estate agents that you’re a serious buyer with financing lined up.
Why Mortgage Preapproval Matters
Mortgage preapproval gives you a strong edge in a competitive housing market. It shows sellers that your financing is solid, which makes your offer more attractive—especially if there are multiple bids.
It also helps you shop with confidence. You’ll know your price range up front, which keeps you from wasting time looking at homes that are out of budget. And if you get preapproved early, you’ll have time to fix issues on your credit report or improve your credit score before it’s time to lock in a mortgage rate.
How to Get Preapproved for a Mortgage Step-by-Step
Getting preapproved is straightforward when you’re prepared. Here’s a step-by-step guide to help you through the process.
Check Your Credit Report
Start by pulling your credit reports from all three major credit bureaus—Experian, Equifax, and TransUnion—through AnnualCreditReport.com. Review them for errors, outdated accounts, or any negative items that shouldn’t be there. If you spot anything inaccurate, begin the dispute process right away.
Improve Your Credit Score If Needed
If your credit score is lower than expected, take quick action to boost it:
- Pay down high-interest credit card balances
- Ask for a credit limit increase (without increasing spending)
- Hold off on new credit applications
- Make sure all bills are paid on time
Even a small bump in your credit score could help you qualify for a better interest rate and save thousands over the life of your loan.
Gather Your Financial Documents
Lenders will require documents to verify your income, assets, and identity. Prepare the following:
- Pay stubs from the past 30 days
- W-2s or 1099s from the last two years
- Bank statements from the past two to three months
- Federal tax returns from the last two years
- A valid form of ID (such as a driver’s license or passport)
- Your Social Security number
If you’re self-employed, be ready to provide business tax returns, profit and loss statements, and possibly additional documentation to verify steady income.
Compare Mortgage Lenders
Don’t settle for the first lender you find. Get quotes from multiple lenders to compare interest rates, loan programs, fees, and perks. Requesting multiple preapprovals within a 14–45 day window typically only counts as one hard inquiry on your credit report, so it won’t significantly hurt your credit score.
Submit Your Preapproval Application
Once you’ve picked a lender, you’ll fill out a mortgage application and authorize a hard credit check. You’ll upload your documents and confirm your financial details. Many lenders offer a quick turnaround, and you may receive your preapproval within 24 to 72 hours.
Review Your Preapproval Letter
If approved, you’ll get a mortgage preapproval letter outlining the loan amount, loan type, interest rate estimate, down payment, and expiration date. This letter is what you’ll include with your offer when you find a home you want to buy.
Keep in mind that preapproval letters usually expire after 60 to 90 days. If it expires before you find a home, you may need to provide updated documents to renew it.
What Lenders Look At
When you apply for mortgage preapproval, lenders take a close look at your financial profile. Here are the key factors they consider:
- Credit score and history – Your credit score influences the loan programs you qualify for and your interest rate. Lenders also look at your credit report to see your payment history, types of credit, and any late payments or collections.
- Income and employment – Lenders verify that you have stable income to support a mortgage. You’ll need to provide recent pay stubs, W-2s or 1099s, and possibly tax returns. Self-employed applicants may need to provide additional documentation.
- Debt-to-income ratio (DTI) – This is your total monthly debt payments divided by your gross monthly income. Most lenders prefer to see a DTI under 43%, though some programs allow for higher ratios.
- Assets and savings – Lenders review your bank statements to confirm you have enough saved for your down payment, closing costs, and reserves in case of an emergency.
- Loan type and down payment – The loan program you choose (FHA, VA, conventional, etc.) will affect what lenders look for. Some programs allow smaller down payments, but may come with other requirements like private mortgage insurance.
Common Mistakes To Avoid
Small mistakes during the preapproval process can lead to delays or even denials. Here are some of the most common ones to avoid:
- Applying before checking your credit report – Don’t assume your credit report is accurate. Always check for errors first and dispute anything that shouldn’t be there.
- Making large purchases – Buying a car or financing new furniture before closing on your home can raise your DTI or lower your credit score, putting your loan approval at risk.
- Opening or closing credit accounts – New credit applications and changes to your credit history can trigger a red flag for lenders.
- Changing jobs mid-process – Switching jobs during preapproval or before closing can cause issues with income verification.
- Ignoring lender requests – If a lender asks for additional documentation, respond quickly. Delays in sending documents can stall your loan or cause your preapproval to expire.
What Happens After You’re Preapproved
Once you’re preapproved, it’s time to start house hunting. But there are a few things to keep in mind while you’re searching.
Your preapproval letter shows sellers that you’re financially qualified, which makes your offer more competitive. Share this letter with your real estate agent so they can include it when you’re ready to make an offer.
As you look at homes, stay within the price range outlined in your letter unless your financial situation has changed. If it takes longer than expected to find a home, you may need to renew your preapproval by submitting updated documents.
Once your offer is accepted, your lender will begin the formal loan underwriting process. At that point, they’ll order an appraisal and finalize your loan terms before you can close.
Preapproval vs. Prequalification
While they sound similar, mortgage preapproval and prequalification are not the same.
- Prequalification is a quick estimate based on basic information you provide. It doesn’t involve verifying your income, pulling your credit report, or reviewing any documents.
- Preapproval involves a full financial review, including a credit check and documentation. It’s a stronger signal to sellers that you’re ready to buy.
If you’re serious about buying a home, skip the prequalification and go straight to preapproval. It’s more accurate and puts you in a better position when making an offer.
How to Shop Around for Lenders
Don’t stick with the first lender who offers you a preapproval. Different lenders offer different rates, loan programs, and closing costs. Comparing your options could save you thousands.
Here’s how to do it:
- Get multiple quotes – Request preapproval quotes from at least three lenders. You can do this within a short window (typically 14–45 days) to limit the impact on your credit score.
- Compare interest rates and APRs – The interest rate tells you the cost of borrowing. The APR includes fees and gives you the full cost of the loan.
- Review fees and closing costs – Ask for a loan estimate from each lender. Compare origination fees, application fees, and any discount points.
- Ask about loan programs – Not all lenders offer the same programs. Some specialize in FHA loans, while others may offer first-time buyer perks or low-down-payment options.
- Look at customer service – Read reviews and ask questions. A responsive lender can make the process much smoother, especially if you’re buying in a competitive market.
Final Thoughts
Getting preapproved is one of the smartest moves you can make before shopping for a home. It sets a realistic budget, shows sellers you’re serious, and helps you move faster when you find the right place.
By preparing your finances, avoiding common missteps, and comparing lenders, you can make the process easier and potentially save thousands on your mortgage. Whether you’re buying your first home or your next one, preapproval puts you in control of the process.
Frequently Asked Questions
Can I make an offer on a house without a mortgage preapproval?
Yes, but it puts you at a disadvantage. Sellers are more likely to accept offers from buyers who are already preapproved because it shows you’ve been vetted by a lender and can likely close the deal. Without preapproval, your offer may not be taken seriously—especially in a competitive market.
Does mortgage preapproval lock in my interest rate?
No, preapproval does not lock in your interest rate. That usually happens later, during the formal loan application process once you’ve made an offer on a home. Some lenders may let you lock in a rate early, but this typically requires a property address and a signed purchase agreement.
Can I get preapproved if I’m self-employed?
Yes, but it usually requires more documentation. You’ll likely need to provide at least two years of personal and business tax returns, profit and loss statements, and bank statements. Lenders want to see steady, reliable income over time, so be ready to show a consistent track record.
Will preapproval affect how much I need to put down?
Indirectly, yes. The loan program you’re preapproved for may come with minimum down payment requirements. For example, FHA loans require at least 3.5% down, while conventional loans can vary. Your credit score and overall financial picture will also influence how much the lender expects you to put down.
Can I change lenders after getting preapproved?
Yes, you’re not locked into any one lender just because you got preapproved. You can still compare options and go with a different lender if they offer better rates or terms. However, switching may mean starting the application process over, so keep that in mind if you’re on a tight timeline.
